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The Dialectics of Engaging the BOP through Microfranchising: The Dialectics of Engaging the BOP through Microfranchising:

Evidence from a Mexican Agribusiness Evidence from a Mexican Agribusiness

Rafael Hernandez Cazares

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In presenting this dissertation as a partial fulfillment of the requirements for an advanced degree from Georgia State University, I agree that the Library of the Univers ity

shall make it available for inspection and circulation in accordance with its regulat ions governing materials of this type. I agree that permission to quote from, copy from, or publish this dissertation may be granted by the author or, in her absence, the professor

under whose direction it was written or, in his absence, by the Dean of the Robinson College of Business. Such quoting, copying, or publishing must be solely for scholarly

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Rafael Hernandez-Cazares

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The author of this dissertation is:

Rafael Hernandez-Cazares Antofagasta 2219, Colomos Providencia Guadalajara, Jalisco. Mexico

44660 rhernandez@up.edu.mx

The director of this dissertation is:

Lars Mathiassen J. Mack Robinson College of Business

Georgia State University Atlanta, GA 30302-4015

The Dialectics of Engaging the BOP through Microfranchising: Evidence from a

Mexican Agribusiness

By

Rafael Hernandez-Cazares

A Dissertation Submitted in Partial Fulfillment of the Requirements for the Degree

Of

Executive Doctorate in Business

In the Robinson College of Business

Of

Georgia State University

GEORGIA STATE UNIVERSITY

J. MACK ROBINSON COLLEGE OF BUSINESS

2016

Copyright by

Rafael Hernandez-Cazares

2016

ACCEPTANCE

This dissertation was prepared under the direction of Rafael Hernandez-Cazares Dissertation Committee. It has been approved and accepted by all members of that

committee, and it has been accepted in partial fulfillment of the requirements for the degree of Executive Doctorate in Business in the J. Mack Robinson College of Business of Georgia State University.

Richard Phillips, Dean

DISSERTATION COMMITTEE

Dr. Lars Mathiassen (Chair)

Dr. Wayne Lord

Dr. Wesley J. Johnston

iv

ACKNOWLEDGEMENTS

I would like to express enormous admiration and gratitude to my advisor, Dr. Lars

Mathiassen. This dissertation would not have been possible without your commitment,

patience, support, and guidance. You are an inspirational professor and a wonderful human

being.

I also want to thank my committee members, Dr. Wayne Lord and Dr. Wesley J.

Johnston for your helpful comments and suggestions.

I would like to thank Dr. Sergio Quiñonez-Romandía and Dr. Late Lawson-Lartego

for their substantial input as co-authors of a research paper that contributed substantially to

my dissertation. Thanks for your company and solidarity. A lonely way is harder to be

walked.

I want to thank ANSA for your trust and vision. Thanks Sergio.

I would like to thank Universidad Panamericana especially Dr. Juan de la Borbolla

for making possible this venture. Thanks to my team and peers for the time, I could not

give you during these years. Dixie & David Thanks.

Special thanks to my family for your support, your patience, for your

comprehension in my absence. All this is for you.

A Dios por todas sus bendiciones.

A mi esposa Miriam, gracias por creer en mí y por todo el tiempo que te has tenido

que duplicar durante estos años. Sin duda tu amor, tu paciencia, tu dedicación y tu fortaleza

son piezas fundamentales para que todo esto haya sido posible.

A mis hijos Rafael, Josemaría y Miriam, gracias por su alegría y su paciencia.

Ustedes son y serán siempre mi inspiración y motivación en todo lo que hago.

A mi madre, gracias por darme ejemplo de fortaleza, de fe y de amor. Gracias por

creer en mí y por tu amor incondicional.

A mi padre, gracias por darme tu ejemplo de trabajo y sabiduría y por darme lo

mejor que pudiste siempre. Ahora que no estas, tus enseñanzas permanecerán por siempre

en mi corazón.

v

TABLE OF CONTENTS

ACKNOWLEDGEMENTS ............................................................................................ iv

LIST OF TABLES .......................................................................................................... vii

LIST OF FIGURES ....................................................................................................... viii

ABSTRACT ....................................................................................................................... x

I INTRODUCTION ..................................................................................................... 1

I.1 Research Domain.............................................................................................. 1

I.2 Research Perspective........................................................................................ 3

I.3 Research Design................................................................................................ 4

I.4 Summary ........................................................................................................... 6

II LITERATURE REVIEW ....................................................................................... 10

II.1 Value Co-creation Strategy ........................................................................... 10

II.2 Important Conditions for BOP Engagement............................................... 12

II.3 Experiences of Business Engaging the BOP ................................................ 16

II.4 Microfranchising ............................................................................................ 17

III THEORETICAL FRAMING ................................................................................. 20

III.1 Dialectic Theory: Key Concepts.................................................................... 21

III.2 Application of Dialectic Theory .................................................................... 24

III.3 Tensions in Strategizing BOP........................................................................ 25

IV RESEARCH METHODOLOGY ........................................................................... 29

IV.1 Philosophical Perspective .............................................................................. 31

IV.2 Research Design.............................................................................................. 33

IV.3 Strategizing Process ....................................................................................... 35

IV.3.1 Committing to BOP Strategizing ..............................................................36

vi

IV.3.2 Exploring Options ......................................................................................37

IV.3.3 Designing AgroEstacion .............................................................................39

IV.3.4 Implementing AgroEstacion ......................................................................41

IV.3.5 Planning Growth ........................................................................................42

V DATA COLLECTION AND ANALYSIS ............................................................. 44

V.1 Data Collection ............................................................................................... 45

V.2 Data Analysis .................................................................................................. 47

V.2.1 Data Reduction ...........................................................................................48

V.2.2 Data Display ................................................................................................51

V.2.3 Conclusion Drawing and Verification ......................................................52

VI RESULTS ................................................................................................................. 52

VI.1 Committing BOP ............................................................................................ 55

VI.2 Exploring Options .......................................................................................... 61

VI.3 Designing AgroEstacion................................................................................. 69

VI.4 Implementing AgroEstacion.......................................................................... 74

VI.5 Planning Growth ............................................................................................ 78

VI.6 Synthesis of the Strategizing Process............................................................ 80

VII DISCUSSION ........................................................................................................... 86

VII.1 Empirical Contribution ................................................................................. 87

VII.2 Conceptual Contribution ............................................................................... 89

VII.3 Managerial Lessons........................................................................................ 91

VIII CONCLUSION............................................................................................... 94

REFERENCES................................................................................................................ 97

APPENDIX .................................................................................................................... 103

vii

LIST OF TABLES

Table 1. Engaged Scholarship Research Components .................................................. 6

Table 2. Action Research: Problem-Solving Phases .................................................... 43

Table 3. Research Phase Activities ................................................................................ 45

Table 4. Data Sources ..................................................................................................... 46

Table 5. Chronological Observation of Tensions in the Strategizing Process ........... 52

Table 6. Synthesis of the Dialectical Analysis of the Strategizing Process ................ 81

Table 7. General Theoretical Concepts ....................................................................... 103

viii

LIST OF FIGURES

Figure 1. The Asset Hexagon (From Penh, 2010) .........................................................14

Figure 2. Integrated Model for Strategizing Value Co-Creation with the BOP (From

Cazares et al., 2015) .................................................................................................28

Figure 3. AgroEstacion Business Model (Cazares et al., 2015)....................................40

Figure 4. Data Analysis Approach (From Sing, 2011)..................................................48

ix

LIST OF ABBREVIATIONS

ANSA Agroservicios Nacionales, S.A.

BOP Bottom of the Pyramid / Base of the Pyramid

CBO Chief Business Officer

CCO Chief Commercial Officer

CEO Chief Executive Officer

CPR Collaborative Practice Research

DCT Dynamic Capability Theory

GSU Georgia State University

JV Joint Venture

MNC Multinational Companies

NGO Non-Governmental Organization

ODS Option-Driven Strategizing

PBA Partnership Business Agreement

S-D Service-Dominant (“Service-Dominant logic of marketing”)

SLA Sustainable Livelihoods Approach

TMT Top Management Team

UNDP United Nations Development Program

x

ABSTRACT

The Dialectics of Engaging the BOP through Microfranchising: Evidence from a

Mexican Agribusiness

by

Rafael Hernandez-Cazares

December 2016

Committee Chair: Rafael Hernandez-Cazares

Major Academic Unit: Executive Doctorate in Business

Microfranchising is emerging as a potentially powerful strategy for reaching the

enormous markets at the base of the pyramid (BOP). Microfranchising also represents an

effective and sustainable way to contribute to poverty alleviation and economic growth.

However, we know little about how organizations maneuver contradictory forces as they

use this innovative business model to engage the BOP. To address this gap, I offer a

longitudinal case study of an emerging microfranchise effort by a successful Mexican

agribusiness—one whose ambitions to continue growing were challenged by multinationa l

agrochemicals suppliers. As this project shows, companies and BOP markets can realize

mutual benefits from a value co-creation strategy. Specifically, I adopted a dialectica l

approach to analyze the tensions and competing forces that arose as business managers and

local BOP distributors and producers collaborated in this emerging microfranchis ing

venture. As a result, the research offers three contributions. First, it provides a detailed

empirical account of how contradictory forces shaped the Mexican agricultural firm’s

implementation of microfranchising to engage with BOP farmers. Second, it presents a

conceptual synthesis that describes the major contradictory forces a company faces as it

implements microfranchising as part of its BOP strategy. Finally, it offers lessons for how

business managers can maneuver contradictory forces to co-create value with the BOP

through microfranchising.

xi

Keywords: Business strategy, microfranchising, dialectics, bottom of the pyramid,

agribusiness, tensions, managerial maneuvers, tension categories.

1

I INTRODUCTION

I.1 Research Domain

The time and resources invested in poverty relief have shown how difficult it is to

achieve. The problem is deeply rooted, and a great and increasing gap exists between the

haves and the have-nots. Technological and scientific advances, as well as more

sophisticated products and services have not only failed to bridge the divide between rich

and poor, they have contributed to increasing the disparity between them to the point that

it appears irreconcilable (Pehn, 2010). At the same time, the rapid development of

attributes of goods and services has increased the speed of market response to these latest

generation satisfiers (Prahalad & Hart, 2002). These differences hurt not only those who

suffer; they call on us all to apply the same intensity that we invest in creating products and

services to dress these wounds of humanity. Heeding this call, various sectors have

launched efforts to develop their ability to respond (that is, their response-ability).

To relieve poverty, the intellectual and academic sectors contribute much to theory,

while governments and philanthropists carry out efforts to support real-world initiatives.

Little, however, have the three sectors done jointly to take advantage of both the capacity

for analysis and observation of theoreticians, and the practical and long-term skills of

practitioners. However, in 2005, Prahalad offered a comprehensive theoretical argument

for “eradicating poverty through profits” (Prahlad, 2005). The starting point for this

research is Prahalad’s important contribution to both theory and practice.

Prahalad suggests that government efforts to allocate money to social programs

ends either when the budget runs out or when those in power change, bringing in new

priorities and perspectives on social programs. Similarly, even philanthropists who are

2

completely devoted to serving vulnerable groups stop when their personal or foundation

funds run dry. In any case, such efforts appear nearly fruitless when compared to the ocean

of need among the world’s poor. As a result, cross-contributions from both government

and philanthropic/nongovernmental organizations (NGOs) are beginning to focus on

solutions that are possible only in partnership with business. As Penh concludes, “the

increasing convergence of research and practice in the field of poverty and conflict is an

exciting frontier. However, considerably more needs to be done in order to make these

convergences more meaningful in the future and integrated into the work of the range of

international actors, including business” (Penh, 2009). Efforts to relieve inequality require

the same force and speed that businesses apply to promoting new products and services.

We must address these social needs with the same capacity and intensity as the needs of

the market. Most importantly, efforts to address social needs require the same type of long-

term economic motor that moves industrial and commercial corporations: profitability.

Problems of inequality and the social erosion that poverty fosters appear to intens ify

in rural environments (Reardon & Vosti, 1995), where a greater concentration of inequality

exists and economic activity centers on agricultural production. In this food production

environment, there is an urgent need for a model of value creation that will facilitate the

development and social advancement of individuals (Coombs, Ahmed, & Israel, 1974).

Companies devoted to agro-industry have developed business models that facilitate

significant growth and development. These organizations, which are closely related to and

reliant upon these vulnerable groups for daily production activities, might be open to

sharing the value created through these business activities.

3

If so, it would appear simple to solve perennial problems of imbalance in

development and social and economic progress: organizations would simply and

reasonably share the considerable economic value created with the population that makes

it possible (C. Prahalad & Hart, 2002). Against this backdrop, my dissertation is concerned

with examining the use of an appropriate business model—microfranchising—to share

economic benefits with poor populations. The aim is to develop new knowledge about the

major contradictory forces a company faces as it implements microfranchising to engage

the Base of the Pyramid (BOP). At the same time, my ambition is to contribute new insights

that can help business managers better maneuver contradictory forces within their

company, society, and business tradition as they undertake such an endeavor. I use the term

“maneuver” as a way to manage contradictions, a way to face tensions, the process of

designing a business stratagem. To help achieve these goals and ambitions, this dissertation

builds on the engaged scholarship model (Andrew H Van de Ven, 2007b).

I.2 Research Perspective

Traditionally, businesses have considered profitability as their main—and

sometimes, only—goal. Further, the organizational inertia of most companies view

consumers and distributors as competing forces (Lusch & Vargo, 2006) in the objective of

maximizing profits. All this makes it very difficult for companies to adopt new ways of

creating value that imply sharing economic benefits with customers and distributors.

Proposing a different business approach is a major organizational change that competes

with the status quo in most companies.

In this context, the specific theoretical device I use to inform my analysis and help

focus the collection of empirical material is dialectic theory. I chose dialectics as the

4

dominant analytical lens because this classical theory allowed me to construct a very firm

theoretical perspective focusing on the change process, which is crucial given that my

dissertation seeks to explain a phenomenon in a timeline (Andrew H Van de Ven, 2007a).

Dialectics theory also proposes that contradictions are intimately tied to the essence of

social life and that knowledge generation about the process, its content, and the background

is only possible by observing how contradictions appear in the timeline. Because the

research reported here was driven by empirical observation of paradoxical facts, I consider

suitable to apply a theory that is based on the contrast of contradictions and is a recognized

theory that helps to study and understand them (Andrew H Van de Ven, 2007a).

I.3 Research Design

The dialectical approach provides a process perspective on change (Van de Ven &

Poole, 1995), and our research team used it to collect and analyze data from Agroservic ios

Nacionales, S.A. (ANSA), a Mexican agribusiness, while it implemented a

microfranchising business. In this implementation process, decisions about investment,

partner selections, business models, and human resources all involved competing forces,

which managers had to negotiate to form alliances, align interests, and make decisions

across ANSA’s value chain. Therefore, to better understand the changes organizat ions

undergo when they seek to co-create value with the poor population— and also to help

practitioners more successfully manage this process—this research looked for an answer

to the question: How do organizations maneuver contradictory forces while using

microfranchising to engage the BOP?

This “how” question involved contemporary issues that were beyond my control,

such as business economic interest or poverty social complexity. I therefore used a

5

qualitative case study method (Eisenhardt, 1989; Yin, 2003) as the foundation for a process

study of events that are critical to decision making (Van de Ven 2007, p. 196-197).

Intrinsically, the focus is on the nature and the flow of events or activities that an

organization suffers, rather than on the concepts concerned with the causes, or

consequences of change. (K. B. t. f. c. s. r. A. o. M. R.-. Eisenhardt, 1989; Yin, 2003)

This research closely examined the decision-making process over time in a

successful 35-year-old Mexican agrochemical distributor, whose board was facing a major

challenge: After decades of serving as a link between transnational suppliers and final

customers, the company’s business model was in question, as those same suppliers had

begun aggressively seeking a direct relationship with customers. The company was also

struggling with its ability to strategize innovative options to make its continued existence

possible, as such, options were, for its leaders, totally unexplored ways of doing business.

To deepen the understanding of this strategizing process and to assure reasonable valid ity,

this research collected data from different sources. Data collection methods included

formal interviews with top managers, transnational suppliers’ executives, regional and

local workers, distributors, and final consumers; analysis of electronic correspondence;

analysis of board and management meetings; and study of corporate documents.

Looking to improve the relevance to practitioners, this study utilized the engaged

scholarship method, “a participative approach that considers the perspectives of various

stakeholders to understand in a better way those complex problems” (Van de Ven, 2007,

p. 9). Although I directed all of the team’s research activities, I sought out feedback and

advice from various key stakeholders and other researchers in each of the four research

phases: theory building, research design, problem formulation, and problem solving (Van

6

de Ven, 2007 p. 26–29). The research followed data analysis procedures and display

methods suggested by Miles and Huberman (1994) for qualitative case studies using three

parallel activities: data reduction, data display, and conclusion drawing and verification.

Through these methods, the research contributes:

A detailed empirical account of how contradictory forces shaped a Mexican

agribusiness’s efforts to implement microfranchising to engage with BOP

farmers

A conceptual model that describes the major contradictory forces a company

faces in implementing microfranchising to engage the BOP

Lessons for how business managers can maneuver contradictory forces when

using microfranchising to co-create value with the BOP

I.4 Summary

Table 1 summarizes the dissertation’s research design.

Table 1. Engaged Scholarship Research Components

(adapted from Mathiassen et al., 2012)

Research Description

P: problem

setting

ANSA, a Mexican agribusiness, engaged in designing and

creating a new franchise business model to penetrate markets in the BOP corn farmers’ segment in collaboration with select distributors. This strategic effort challenged ANSA’s current business operation

by proposing a competing business model—AgroEstacion—which established complementary relationships upstream and downstream

in the distribution network and included crop commercialization as an entirely new form of business

A: area of concern

Strategizing value co-creation with the BOP through microfranchising

7

F: theoretical

framing

FA: Integrated model for strategizing Value Co-creation with

the BOP

FI: Dialectics to understand and explain complex organizational changes

M: research method

Qualitative longitudinal case study Engaged scholarship

RQ: research question

How do organizations maneuver contradictory forces while

using microfranchising to engage the BOP?

C: contribution CA: A detailed empirical account of how contradictory

forces shaped a Mexican agribusiness’s efforts to implement microfranchising to engage with BOP farmers

CF: A conceptual synthesis that describes the major

contradictory forces a company faces as it implements

microfranchising as part of their BOP strategy

CP: Lessons for how business managers can maneuver contradictory forces when using microfranchising to co-create value with the BOP

The subsequent chapters of this dissertation detail the key components and

arguments of the research as follows:

Chapter 2: Literature Review. This chapter presents a comprehensive review of the

literature on value co-creation with the BOP, examining what previous research reveals

about the value co-creation strategy, conditions for BOP engagement, experiences

engaging the BOP, and microfranchising theory. It thus focuses on existing knowledge

concerning the BOP concept viewed as both a social issue and a business opportunity;

existing analytical tools for better understanding poverty, such as the Assets Hexagon;

and poverty alleviation strategies based on business models that focus on creating

social and economic value through partnerships with the poor. As this literature review

shows, few studies explore conditions for engaging with the BOP; even fewer offer

8

qualitative process studies of the limited rational and disordered political processes

through which organizations make decisions when engaging with this social group. The

review also reveals that no studies have yet developed a conceptual model of the major

contradictory forces a company faces as it implements microfranchising to engage the

BOP.

Chapter 3: Theoretical Framing. This chapter provides a description of dialectics and

its historical origins, applications, and constructs. It explains how I adopted dialectics

as a way to understand and study social phenomena in general, and how it has proven

particularly useful as a framework for understanding issues related to social change.

This chapter shows how I complemented dialectics—with its central focus on collid ing

events, competing forces, and contradictory values—with the integrated model for

strategizing value co-creation with the BOP. This combination showed to be a helpful

framework for analyzing strategic decision-making processes in which powerful

international conglomerates, successful national companies, small local distributors,

and BOP consumers compete, create alliances, and maneuver to align their interests

and make complex decisions.

Chapter 4: Research Methodology. This chapter discusses the rationale for adopting

a qualitative, process case study approach to answer a “how” question in a context in

which I had no control over the unfolding events. Further, it explains the use of engaged

scholarship to increase the relevance of the research by including the insightful

viewpoints of stakeholders. Lastly, the chapter describes the ANSA case and the

challenges the company faced while implementing a microfranchise model in the

complex Mexican agricultural market.

9

Chapter 5: Data Collection and Analysis. This chapter summarizes the data

collection process, that follows the suggested principles of data collection in a case

study that aim to improve validity through data triangulation: “(1) use multiple sources

of evidence; (2) create a case study database; and (3) maintain a chain of evidence”

(Yin, 2013). This chapter also describes the methods used when analyzing this

qualitative data, consisting of three activities: data reduction, data display, and

conclusion drawing and verification (Miles & Huberman, 1994).

Chapter 6: Results. This chapter presents a chronological description of the activit ies

performed by the research team supporting ANSA’s Top Management Team (TMT) in

the strategizing BOP engagement project, here I present an analysis of tensions

involved in each stage of the strategizing process describing the opposites in each

tension, and relating the tension with the elements of the integrated model for

strategizing BOP. I also present a categorization of the tensions. Finally, I present the

managerial maneuvers performed to assess each tension, and the category of the

maneuver.

Chapter 7: Discussion. In this chapter I present the research’s three major

contributions, which reveal the processes through which managers maneuver

contradictory forces when engaging with the BOP:

1. Empirical Contribution; a detailed empirical account of how contradictory

forces shaped the efforts of a Mexican agribusiness as it implemented a

microfranchising model to engage with BOP farmers

10

2. Conceptual Contributions, the theoretical concepts and the way I used them

to describe the major contradictory forces a company faces as it implements

microfranchising to engage the BOP

3. Managerial Lessons; how business managers can maneuver contradictory

forces when using microfranchising to co-create value with the BOP

Chapter 8: Conclusion. The dissertation concludes with a discussion of the main

argument and limitations of the study.

II LITERATURE REVIEW

II.1 Value Co-creation Strategy

Regarding competitive strategies in business, Michael Porter’s theories have been

very influential since he introduced the concept of the “value chain” in 1980 and therein

captured the unilateral role of the firm in creating value (Porter, 1980). In this traditiona l

conception, value creation occurs “inside” the firm through its activities, while consumers

are “outside the firm” (Porter, 1980). In this model, the firm and the consumer have clearly

differentiated roles: production and consumption, respectively. The market—an

aggregation of consumers as the target of the firm’s offerings through exchanges— is

therefore separate from the value creation process (Kotler, 2002). As such, the process of

value creation is company-centric, and firms conceptualize customers as a “source” of

economic value extraction.

In 2000, Prahalad and Ramaswamy presented a disruptive conception of customers

as “co-creators” of value; part of the firm’s network; and collaborators, co-developers, and

competitors (Prahalad & Ramaswamy, 2000). Four years later, these same authors

11

proposed that, “co-creation is about joint creation of value by the company and the

customer. It is not the firm trying to please the customer” but rather about “allowing the

customer to co-construct the service experience to suit her context.” Thus, new business

models are to be “joint problem definition and problem solving” (C. K. Prahalad &

Ramaswamy, 2004). These new conceptions began to break the traditional customer

paradigm.

That same year (2004), Vargo and Lusch published the article “Evolving to a New

Dominant Logic for Marketing,” which has become known as the “service-dominant (S-

D) logic of marketing.” In that publication, the authors reinforced the ground-breaking idea

that consumers are “operant resources” and must be conceived “always as a co-producer”

(Vargo & Lusch, 2004), shifting the focus of scholars and practitioners from a goods logic

to a service logic based on interactivity, connectivity, and ongoing relationships with

customers. Therefore, terms such as “producer” and “consumer” become inconsistent with

the S-D logic’s co-creation of value premise (Lusch & Vargo, 2006). By 2006, mult ip le

marketing scholars had studied and referred to this value co-creation concept. Although all

of these scholars imply the networked nature of value co-creation, we still have limited

understanding of how managers deal with this interactive and permanently changing set of

relationships that has suddenly become part of the wealth-creation process.

These new conceptions about producers and consumers demand new attitudes on

the part of business executives. This new model of relationship, in which customers are no

longer counterparts and rivals in the battle to make money, creates resistance in business

practices. According to the new logic, “smart” negotiations no longer imply getting a

greater economic benefit than your customers do. Now, “smart” business decisions are

12

those that create bigger value with new allies and that share with customers the resulting

economic, social, and human value. These new dynamics create tensions in organizations,

especially for business leaders who are accustomed to traditional business models.

II.2 Important Conditions for BOP Engagement

“Eradicating poverty through profits” is a particularly important strategy for value

co-creation and is the main vision in Prahalad’s influential 2004 book, The Fortune at the

Bottom of the Pyramid. This vision continues to create interest and discussions among

researchers, sociologists, and business managers. The book demands reflection and action,

calling on strong companies in the developed economies to change their perception about

the poor and to design profitable business ventures that target the needs of this population

and contribute to poverty reduction. The fundamental proposition is that the poor constitute

more than half the world’s population and represent a significant market opportunity, with

more than $13 trillion in purchasing power. In other publications with coauthors (Prahalad

& Hart, 2002; Prahalad & Ramaswamy, 2004), this discussion advances into the business

ethics arena (see Table 7 in Appendix 1).

Indeed, from a business perspective, the BOP proposition is quite attractive.

Viewing the poorest as a consumer market represents enormous growth potential for

multinational companies (MNCs). From an ethical perspective, scholars suggest that the

private sector should create employment and income opportunities for the poor by working

with them as producers and, in so doing, contribute to a growing consumer market. London

et al. (2010) and Viswanathan et al. (2010) offer a more comprehensive view of the BOP

population as consumers, workers, producers, and entrepreneurs. This line of research has

led to a more realistic view of the constraints faced by the BOP population—such as

13

producers lacking capital, market access, and knowledge, and workers lacking access to

jobs that might offer opportunities for social advancement.

London and Hart remark that, at its core, the idea is to develop opportunities for

mutual value creation, supporting poverty alleviation for the BOP population and

supporting growth and profitability for firms (London & Hart, 2004). The challenge is,

therefore, for businesses to account for the needs of poor people at the BOP when they

design strategies and implement innovative business models. Practically, to realize this

vision, we must engage traditional MNCs. Given the adverse business conditions typical

of the BOP population’s geographical locations (Wanasika, 2013)—includ ing

underdeveloped infrastructure and, in some cases, a culture of poverty, corruption, and

violence—the costs of business logistics and operation increase. These special conditions

require dedicated resources in the firms, relevant market information, specific workforce

profiles, and importantly, particular managerial skills. For these reasons, few firms and

managers look forward to engaging with the BOP.

Penh, in her 2010 article “New Convergence in Poverty Reduction, Conflict, and

State Fragility,” addresses “what business should know” about the BOP, incorporating

additional human, social, and political aspects to define poverty more broadly. Sen, who

emphasized that individuals require a range of capabilities in order to make choices that

improve their well-being, provided one of the most influential articulations of poverty in

broad terms (Sen, 1999). Viewing poverty broadly can help firms understand that poverty

often has multiple causes. For instance, lack of access to education, health care, or nutrit ion

due to social discrimination can dramatically limit an individual’s productive capacity—

and therefore her or his ability to create income (Penh, 2009). Sen’s capabilities theory

14

influenced the development of the Sustainable Livelihoods Approach (SLA), which

provides a framework to understand the BOP population. As such, agents can use it as a

framework to help facilitate social mobility among the poor. The SLA suggests

interventions that build on assets or capital for the poor in six quadrants: human, natural,

financial, physical, social, and political (see Figure 1).

Figure 1. The Asset Hexagon (From Penh, 2010)

For this reason, doing business with the BOP requires innovative solutions beyond

traditional ways of doing business. London and Hart’s (2011) book, Next Generation

Business Strategies for the Base of the Pyramid, reframes Prahalad’s insight “creating a

fortune with the BOP rather than at the BOP” (Calton, Werhane Hartman & Bevan, 2013).

It also provides relevant case studies and guidelines for how business leaders might

strategize the BOP. Similarly, other scholars such as (Tashman & Marano, 2009) and

(Wanasika, 2013) provide insights into strategic options for tapping into the BOP market.

15

Although many scholars agree on some general strategies that businesses can use

to co-create value with the BOP, Tashman and Marano argued that “scholars have yet to

describe theoretically how businesses develop and deploy these strategies” (Tashman &

Marano, 2009). So, while progress has been made in BOP research and practice, we still

know little about the processes through which a firm’s managers might leverage the BOP

proposition and successfully transit from traditional business models to these new-logic

business models, in which customers become co-creators, and economic value is no longer

extracted from but is rather shared with them.

Another important stream in BOP literature is the work of Tarun Khanna, in the book

and article titled Emerging Giants: Building World-Class Companies in Developing

Countries (Khanna & Palepu, 2004). The authors invite to “exploit the understanding of

products and markets”. Saying that many emerging-market companies have become world-

class businesses by taking advantage of their knowledge of local product markets, Khanna

explains that local competitors can defeat MNCs by “judiciously adapting to the special

characteristics of customers and business ecosystems at home.” They explain this

advantage of local competitors especially evident in BOP markets given that customer´s

needs and tastes are idiosyncratic. Local competitors are the first to realize that and to build

business opportunities around distinctive national characteristics. These authors also

encourage local companies to “leverage familiarity with labor and capital markets.” This

strategy implies that emerging-market players use their knowledge of local talent and

capital markets to serve customers at home in a cost-effectively way. Finally, Khanna and

Palepu consider that institutional voids can be very profitable business opportunities for

16

local organizations that could play the role of insurance companies, banks, and advisor

firms for local consumers and companies.

II.3 Experiences of Business Engaging the BOP

Several examples from the literature illustrate how poverty reduction interventions

that provide economic incentives and business opportunities can be effective in helping the

poor and promoting peace.

The example of CEMEX, the Mexican construction supplies giant, is particula r ly

relevant to this research because of its geographical similarities. In its promising

“Patrimonio Hoy” program, CEMEX partners with distributors and community groups to

deliver construction goods in Mexico on microcredit. The program helps BOP people build

houses—in an average of one-third the time and at 80 percent of the usual cost—and is

thereby helping address a housing crisis in Mexico, where as many as one million people

lack housing. At the same time, Patrimonio Hoy is creating a sizable market opportunity

for CEMEX (Segel, Chu, & Herrero, 2006).

Among the relevant experiences in the agribusiness sector is CARE’s effort to

reinforce the dairy industry in Bangladesh. This program is different from other traditiona l

aid organization efforts, which typically redistribute resources to people in need, but too

often are deficient in promoting “BOP producers to increase their productivity and reduce

poverty in a self-reliant, sustainable way” (McKague & Siddiquee, 2014). As a global

NGO focused on food security, CARE takes a different route than traditional aid

approaches, engaging with small farm holders—mostly women—to improve their

productivity and promote access to better inputs and more efficient value chains. In 2005,

CARE opened its dairy project in Bangladesh, the most densely populated country in the

17

world. Cows in Bangladesh produce an average of 1 liter of milk per day, compared to

cows in developed countries, which can produce 30 liters per day. Through its Value Chain

Development (McKague & Siddiquee, 2014) program, CARE is improving milk yield by

facilitating and promoting access to genetics, veterinarians, and medicines for the cattle

through a microfranchise network; the goal is to reduce poverty and starvation in

Bangladesh.

Researchers observing BOP business strategies have presented abundant case

studies, as documented by Prahalad (2006), Jain and Vachani (2006), and Rangan

(2007).Together, these researchers offer numerous success stories and explain many

“strategic capabilities that have benefited the local businesses and communities in which

poverty exists” (Tashman & Marano, 2009). However, scholars have yet to describe and

theorize how businesses design and undertake these strategies, particularly by

conceptualizing poverty in terms that relate it to the value of a company’s resource base.

II.4 Microfranchising

In the challenging endeavor of poverty mitigation, it is particularly important to

adopt a long-term view. Given the complexity of the problems the BOP market faces, short-

term or snap interventions that lead to sustainable success do not exist. If they existed, they

would have brought about the elimination of poverty long ago. Businesses cannot solve all

the complex poverty issues, but long-term investments could lead to strategic partnerships

with the BOP itself and to a building of trust and commitment. However, this trust-and-

commitment building takes time and requires value creation between firms and the BOP

through collaborative problem solving, joint learning and failing, and local adaptation

(Prahalad and Ramaswany, 2004). Still, such approaches can help firms concretize,

18

localize, and socialize their products and services to the BOP (Viswanathan, 2011) and

have the potential to empower the BOP population to take full advantage of new business

opportunities (Sen, 1999).

Considering this long-term sustainability, nonprofit and local firms as well

as MNCs have designed and experimented with new types of value-chain partnerships

upstream and downstream. Organizations are also increasingly embracing the concept of

social enterprise and using market-based approaches and solutions to solve complex

poverty issues, reduce social harms, and advance public benefits. Such efforts have proven

profitable (Rangan et al., 2008).

An example of this social enterprise is the microfranchise, an innovative business

model with high potential to scale-up entrepreneurship at the BOP to co-create value and

contribute to public goods and poverty eradication (Fairbourne, 2007). Microfranchising is

a variant of the traditional franchising approach, which is a contractual agreement in which

one firm (the franchisor) licenses a proven business concept, operational system, or

powerful trademark to a second firm (the franchisee). For the franchisor, franchising is

typically an expansionary strategy utilized to spread across geographic markets and win

in-market share while overcoming the agency concerns and capital constraints associated

with internal growth (Combs & Ketchen, 1999a, 1999b). For the franchisee, the model

offers the benefits of operating one’s own business while mitigating risk by leveraging the

franchisor’s proven brand and standardized business format (Kaufmann & Dant, 1996;

Kistruck et al., 2011).

Microfranchising has many similarities with the traditional franchising model; a

key difference, however, is that microfranchising is intrinsically oriented to creating social

19

good and well-being for franchisees in the BOP market. The prefix “micro” also connotes

several additional distinctions. The main difference from the traditional model is that the

emerging microfranchising model is adapted to the BOP market and tends to operate at a

minimum scale (Fairbourne, 2007). For instance, to break the main barrier for poor

entrepreneurs, initial investments by microfranchisees are typically less than $1,500 (Lehr,

2008). The emergent microfranchise model is thus enhanced and standardized; ready to be

scaled up for rapid adoption by interested BOP entrepreneurs. Unlike traditional franchise

models—in which important profit sources are the initial royalties and fees paid by

franchisees—in the microfranchise model, the key economic benefit for institutiona l

franchisors is the volume of the revenues associated with the vast population in the BOP

market.

Existing research on microfranchising focuses almost exclusively on the social

benefits to local communities and on microfranchisee benefits, such as opportunities for

job creation (Christensen, Parsons, & Fairbourne, 2010), reduced risk from buying into a

“proven business system” (J. Fairbourne, 2007), and the benefits of belonging to a

“democratic network” (Magleby, 2007). I found few studies in the literature that describe

the challenges business organizations face when engaging the BOP through

microfranchising. Some studies describe tensions that organizations experience when

changing business orientation, but do not offer a detailed empirical account of how

contradictory forces affect the implementation of microfranchising with BOP farmers.

Thus, an important opportunity exists to study and generate conclusions about this

challenging process in a Mexican agribusiness, with the goal of providing lessons that can

20

help business managers better maneuver contradictory forces and co-create value with BOP

segments in other industries as well.

This review of the literature on value co-creation, business ventures engaging the

BOP, poverty alleviation through profit generation, and microfranchising found few

studies that explore conditions that helped firms effectively engage the BOP, let alone

studies of how societies might create those conditions. Even fewer qualitative process

studies exist that describe the limited rationale and disordered political processes through

which organizations and managers make decisions when engaging with this social group.

Further, the review found no studies that propose a conceptual model of the major

contradictory forces a company faces as it implements microfranchising to engage the

BOP. Based on these findings, my research question is: How do organizations maneuver

contradictory forces while using microfranchising to engage the BOP?

III THEORETICAL FRAMING

Given the research domain and research perspective of this dissertation, I detail

here the specific theoretical devices that informed my analysis of the case material. Using

specific theoretical perspectives to analyze the empirical material allows me to explore

possible explanations. The independent theoretical frameworks also offer specific sets of

theoretically driven concepts and constructs that guided my approach to collecting

material. Additionally theory can offer a focused mindset for data analysis and be able to

enrich existing research, which can work as a reliable guide for future research projects.

For that reason, I consider it crucial that researchers be clear about which theoretical

perspective they have adopted and why. This practice increases the reliability and accuracy

21

of the research process, and therefore facilitates additional argumentation to support and

strengthen principal findings.

As detailed previously, I built the analysis in this dissertation on a paradox:

companies are actively seeking out new business approaches and new ways of engaging

with markets and distributors that directly compete with the approaches to business that

have created their success. To understand in a better way how these contradictory forces

shaped the new business model’s implementation—and how this implementation process

shaped the contradictory forces—we must understand how business managers maneuvered

these contradictory forces when engaging the BOP. To facilitate this understanding, I

adopted dialectical theory as the main analytical device, as well as the Integrated Model of

BOP strategizing to localize in a process perspective the most relevant elements of the

empirical findings.

III.1 Dialectic Theory: Key Concepts

To develop the logic and use of dialectics in this dissertation , an important and

very influential source was the dissertation “Duplicate systems: investigating unintended

consequences of information technology in organizations” (Wimelius, 2011).

Dialectics is a theoretical concept with a long history and several orientations. We

can find dialectical analysis since the first works of Plato, Hegel, George, or Vincent &

Miller (1986), Marx (Marx, 2004), Mao Tse Tung (Tse-Tung, 1937), Churchman

(Churchman, 1971), and Israel (Israel, 1979), in which dialectics has been argued,

analyzed, utilized, modified, and revised. As noted by Ford and Ford (Ford & Ford, 1994),

no single definition can encompass dialectics; instead, different views acknowledge

different epistemological and ontological positions (see Table 7 in Appendix 1). Given this,

22

adopting a dialectical analytical perspective when studying organizations engaging with

BOP markets presents challenges—most notably that it is important to clarify the specific

approach of dialectics applied as well as the actual contributions that dialectics makes to

the study. In general, people often mistakenly conflate dialectical approaches with

positions held by Marxism and related schools of thought. It is common to associate

dialectics with one of its most prominent advocates, but not all dialectical work is Marxist

(Wimelius, 2011); dialectic theory is a general approach to studying social phenomena

(Mathiassen, 1998) and should be understood as such. Bjerknes et al. made a similar point,

stating that “Dialectics is an analytical tool for explaining relations and understanding

change in society” (Bjerknes, Bratteteig, & Espeseth, 1991). Researchers have increasingly

used dialectical approaches to analyze and explain social phenomena related to change in

different fields, among them, organizational studies (Benson, 1977; Seo & Creed, 2002;

Andrew H. Van de Ven, 2007) and information systems studies (Cho, Mathiassen, &

Robey, 2007; Robey & Boudreau, 1999). Robey and Boudreau, for example, use dialectics

to study and understand organizational change and development (Robey & Boudreau,

1999; Robey, Ross, & Boudreau, 2002; Van de Ven & Poole, 1995).

Dialectical approaches, as can be seen in some of the Marx’s works, do not usually

adopt a social deterministic position; rather, their focus is the nature of change (Van de

Ven & Poole, 1995). Thus, we can use dialectical approaches to explain and analyze the

process of change and it can help to observe and better understand the relationship between

social aspects and organizational facts, instead of centering exclusively on one and ignoring

the other. Additionally, I am interested in observing the social phenomena and their

interaction with the organization’s change in a process perspective and not only as static

23

facts. (Benson, 1977; Bjerknes et al., 1991) For these reasons, dialectics fits precisely the

analytical position of this dissertation.

Contradiction is an important concept in any view of dialectical approach. As Va,n

de Ven and Poole note, the definition used for contradiction can be different depending on

each school of thought, for example, researchers following Hegel’s thought frequently

define contradiction in terms of “…a pluralistic world of colliding events, forces, or

contradictory values that compete with each other for domination and control” (Van de

Ven & Poole, 1995).

This view considers contradiction as opposing forces coexisting in a given

situation, with each force having an impact on a given situation or environment that is

opposed to the situation or environment of the other force (Ford & Ford, 1994). These

forces may be internal- conflict between work units, for example- or external, when they

are related to events, developments, or interests, or which may contradict the organization’s

practices (Van de Ven & Poole, 1995).

Dialects explains change in any situation as the relative strength of the opposing

forces and the outcome of their tensions. Stability defined as the lack of change, happens

when the strengths of the opposing forces are relatively in equilibrium, or when one of the

opposites dominates the situation in a total way. A change in the strength of one of the

forces will affect their relative balance. Literature frequently describes opposing forces in

a contradiction as the “thesis” and the “antithesis,” constructs that struggle in a perennial

way and can reconcile in a “synthesis”. Consequently, the synthesis emerging from a

dialectical confrontation is neither thesis nor antithesis, nor is it simply a combination of

the two. On the contrary, what emerges is a different subject, with different characterist ics

24

which distinguish it from the original constructs (thesis and antithesis). Synthesis is not

necessarily a given with the dialectical struggle (De Rond & Bouchikhi, 2004; Sabherwal

& Newman, 2003; Andrew H Van de Ven, 2007b). A reverse in the domination position

appears when the antithesis is so powerful that it can overcome the thesis in a complete

way, but this change cannot be considered the emergence of a new situation or a resolution.

In a similar way, we call inertia or stability to the lack of change, given when the thesis

prevails over the antithesis over time. (see Table 7 in Appendix 1).

III.2 Application of Dialectic Theory

In this dissertation, I use dialectics pragmatically as an analytical tool to investigate

and explain change by focusing explicitly on contradictions. I adopted this approach not

because of ideological or political reasons, but because dialectical theory is a lens that

focuses explicitly on the process of change; this capability is crucial as my research aims

to analyze the trajectory of a phenomenon over time, I present this evolution by describing

empirical observations as a longitudinal case study. In addition, dialectics allows

producing conclusions and knowledge of the context and process of change by observing

and describing how contradictions arise and interact in a chronological way.

The very complex endeavor of implementing a microfranchise business model

engaged with the BOP in the agribusiness industry involves diverse actors across that

industry, including: MNCs supplying agrochemicals, seeds, fertilizers, and other inputs;

local senior distributors with a nation-wide presence; small regional distributo rs;

government agencies; producers; and various industry interest groups (Kistruck, Webb,

Sutter, & Ireland, 2011). To develop and implement a microfranchise, powerful actors must

come together to mobilize essential resources and align interests. Given the heterogene ity

25

of the involved actors in a Mexican context, efforts are intrinsically contradictory; tensions

relate to stakeholder interest (suppliers versus consumers) (Lusch & Vargo, 2006);

business scope (local versus global) (Prahalad & Ramaswamy, 2004); founding sources

(company equity versus partnerships) (Fairbourne, Gibson, & Dyer, 2007), and other

contradictory positions source of conflict.

To capture the complexities and dynamics involved in implementing

microfranchising to engage the BOP in Mexico, I adopted dialectics to reveal these

opposing forces and explain why certain outcomes materialize and others do not.

I assume that networking between industry actors in a microfranchis ing

implementation unfolds in a pluralistic world of colliding events, forces, or contradictory

values that compete with each other for domination and control (Van de Ven and Poole

1995). As such, there are inherent contradictions during the design of the business model,

the decision-making process within the organization, industry practices, involved

technologies, financial models, and the interests and strategies of the participants. These

contradictions constitute a field of forces that continuously generate tensions; such tensions

might encourage or obstruct participants as they seek to fully implement microfranchis ing

and collaborate in diffusing internal and external tensions (Rogers, Fairbourne, & Wolcott,

2011). A key challenge for the managers in this process is therefore to identify, understand,

and manage these tensions as part of the implementation and engagement efforts.

III.3 Tensions in Strategizing BOP

Drawing on the dialectical foundation, I collected data using a process perspective,

observing the microfranchising implementation process over time and identifying key

events in the time line. I observed and described key decisions in the Integrated Model for

26

Strategizing Value Co-Creation with the BOP used in the design and implementa t io n

process of AgroEstación (see Figure 2). I also observed contradictions and conflicts arising,

and the actors involved, identifying how each of these tensions is an expression of the

ongoing struggle within and between the contradictions initially identified in the literature.

This process allowed generating a comprehensive understanding of how contradictory

forces emerged and shaped the implementation of a microfranchising model for engaging

with BOP farmers in a Mexican agribusiness. In addition, I consider that the dialectic

foundation permitted the presentation of a conceptual model that describes the major

contradictory forces a company faces as it implements microfranchising to engage the

BOP.

I classified the tensions following Smith and Lewis (2011), using their

categorization of tensions as performing, organizing, belonging, and learning for a

synthesis of the categories of tensions (see Table 7 in Appendix 1).

Performing refers to those tensions that emerge when organizations seek different

and conflicting goals or decide to address demands from different stakeholders. Conflict

in regards to goals and stakeholders leads to opposing demands and performing tension in

organizations, especially in those that are committed to or engaged in social causes. “One

critical challenge involves how to define success across contradictory goals” (Smith,

Gonin, & Besharov, 2013).

Contradictory organizational structures, cultures, practices, and processes lead to

organizing tensions (Smith & Lewis, 2011). In this specific case, we can see these types of

tensions because social commitments and business enterprise frequently involve different

cultures and inconsistent human resource practices. Frequently even the legal form could

27

give rise to a conflictive situation given the double bottom line that some social-oriented

projects need to perform.

Belonging tensions involve questions of divergent identities (Smith &

Lewis, 2011). This category also refers to existing subgroups within the organization with

different natures of goals, tasks, and different leaders’ drivers. We can observe as leaders

struggle to answer "who are we" and "what do we do".

Learning tensions emerge from the conflict of multiple time horizons, as

organizations strive for growth, scale, and flexibility over the long term, while also seeking

stability and certainty in the short term (Smith & Lewis, 2011). For companies that engage

in a social-committed business project it is frequent that in the short term some managers

and stakeholders expect financial results, and social results appear in the long term.

28

Figure 2. Integrated Model for Strategizing Value Co-Creation with the BOP (From

Cazares et al., 2015)

The Integrated Model for Strategizing Value Co-Creation with the BOP (Cazares,

Lawson-Lartego, Romandia, & Mathiassen, 2015) articulates how the Dynamic Capability

Theory (DCT), Option-Driven Strategizing (ODS), and BOP theories can be interwoven

and used simultaneously to understand how managers can practically strategize the BOP

to co-create value through a step-wise process. In that previous article, we constructed the

model with three iterative steps:

1. First, managers need to define the goals of their strategizing. This requires

commitment from the TMT to follow a non-traditional way to strategize new opportunit ies.

The application of the model requires a suitable level of embeddedness into the BOP

communities for the involved managers to understand and make aware their circumstances.

29

The option thinking theory also comes to play at this stage as it helps managers work with

the BOP to generate options for achieving the strategizing goals. During this step, it is vital

to keep an open mind and be willing to redefine the initial objectives based on the

knowledge gained through interaction with the BOP and their network.

2. In a second step, managers conduct a similar assessment of the firm network

using DCT concepts; organizational and physical resources and how they may be

developed, reconfigured and deployed to meet the new goals. The firm network

incorporates all key stakeholders in the firm’s ecosystem, including suppliers, financ iers

and contractors. Managers should seek feedback on these resources from the BOP and its

network to gain additional insights, which may not be in the scope of the firm. Such

feedback is critical in the strategizing process.

3. Once that information is gathered, a third step analyses the available options

based on ODS theory. It is important to keep in mind BOP and its network as equal partners

throughout this process and to emphasize co-creation of value with them. By listening

carefully to feedback from the BOP and their network, managers increase the probability

that options can co-create value for both parties. Once all parties agree upon the final

options, the firm test pilots them to generate necessary learning and make adjustments

before final implementation.

Authors suggest that following these steps will help ignite value co-creation

between a firm and the BOP network and achieve goals that each party individually would

not be able to realize otherwise.

IV RESEARCH METHODOLOGY

30

In business today, the speed of change and the continual emergence of the unknown

require firms to develop responses and solutions swiftly. Because these solutions research

often inspires, researchers must maintain a rigorous academic structure to ensure their

proposals are appropriate and rooted in evidence. To enable this, business research must

be embedded in stakeholders’ reality; as Van de Ven describes it, “engagement is a

relationship that involves negotiation and collaboration between researchers and

practitioners in a learning community; such a community jointly produces knowledge that

can both advance the scientific enterprise and enlighten a community of practitioners” (Van

de Ven, 2007).

This dissertation aims to represent the engaged research as a retrospective

longitudinal case study that captures and analyzes events and the major contradictory

forces ANSA faced as it implemented AgroEstacion, a new business venture based on

microfranchising to engage the BOP. The case study draws on data captured as part of an

action research project based on Collaborative Practice Research (CPR) (Mathiassen,

2002).

In April 2014, a collaboration began between our Georgia State University (GSU)

research team and ANSA stakeholders based on action research (Susman & Evered, 1978).

The collaboration contributed to practical problem solving with stakeholders, as well as the

development of new knowledge about BOP strategizing. We published early results of the

action research in our article, “Strategizing Value Co-creation with Poor Farmers in a

Mexican Agribusiness” (Cazares et al., 2015), which reports on the overall action research

effort and offers a comprehensive account of how ANSA strategized and implemented its

new franchise business, AgroEstacion, shaped through the Mexican context. The goal was

31

to co-create value among three main players: ANSA and AgroEstacion, the network of

local distributors, and BOP corn farmers.

Early in the collaboration, we revealed key resources across the stakeholder

network and identified a set of available options for value co-creation among the main

players. Option-Driven Strategizing (ODS) (Bowman & Moskowitz, 2001; De Schryver &

Asselbergh, 2003; Faulkner, 1996; Kogut & Kulatilaka, 1994) helped us classify which of

those options could become actionable and eventually realized (Helfat & Peteraf, 2003;

Sandberg, Mathiassen, & Napier, 2014). These early findings allowed us to propose a

conceptual model for strategizing BOP value co-creation. This Integrated Model for BOP

Strategizing combines Dynamic Capability Theory (DCT) with ODS, focusing on the

project’s two main players: the firm’s network, with its physical, knowledge, and

organizational resources; and the BOP network, with its complementary set of knowledge,

physical, and organizational resources (Cazares et al., 2015).

A dissertation by another member of our research team focuses on validating this

model based on further developments at ANSA (Quinonez, 2015). In contrast, the goal of

this dissertation is to present a dialectical longitudinal case study to answer the following

research question: How do organizations maneuver contradictory forces while using

microfranchising to engage the BOP? The two dissertations thus provide complementary

insights into the development and implementation of AgroEstacion—one focused on

approaches to strategizing, and the other focused on the contradictory forces implicated in

the initiative.

IV.1 Philosophical Perspective

32

The philosophical perspectives of research methods involve epistemological and

ontological visions. In the light of this logic, epistemology refers to the theory of

knowledge, and the process of acquiring knowledge, and ontology refers to the nature of

things (Van de Ven, 2007). In the literature we can find multiple classifications of

philosophical perspectives. For instance, Van de Ven (2007) distinguishes between critical

realism, logical positivism, pragmatism, and relativism, in his writings on the relationship

between the ontological and epistemological perspectives and scientific research. As

Myers (1997) noted, it is not a minor decision to follow one of the epistemologica l

positions; even though they are philosophically different principles, the differences are not

that clear in practice.

A central element of the study reported in this dissertation is the observation

and analysis of organizational members and tensions, along with how they communicate

and interpret events as they struggle to implement the microfranchise model to engage the

BOP. For interpretive researchers, reality can only be understood through sociocultura l

constructs such as language, shared meaning, or instruments (Myers, 2013). Additiona lly,

the study’s very specific context—agribusiness in Mexico—provides meaning to the main

observations drawn from empirical data. As defined by Myers (2013), “interpre t ive

researchers tend to focus on context. They aim to understand the context of phenomenon,

since the context is what defines the situation and makes it what it is.” Considering this,

my epistemological assumption for this dissertation is interpretive.

According to Myers, we can categorize research methods in two groups:

quantitative research and qualitative research (Myers, 1997). Quantitative methods

consider numerical data as the best way to describe and understand the reality, synthetizing

33

every phenomenon in a numerical arrangement, assuming that reality can be objectively

explained with an hypothesis, and that statistical analysis can accurately describe the

relationship of the elements observed with the context (Garcia & Quek, 1997). On the other

hand, qualitative research methods utilize parameters not related to numbers, quantity,

volume or frequency (Denzin & Lincoln, 1994). It is not simple to define qualitat ive

methods because they are not related to a specific and limited type of technique. Instead,

qualitative research has cultivated and developed multiple traditions and intellec tua l

schools of thought. This qualitative research aims to develop deep understanding using a

constructive approach where no precise objective reality is captured (Garcia & Quek,

1997). In this respect, a qualitative approach fits well within the philosophical tradition of

interpretivism; moreover, it proposes an adequate approach to this dissertation’s research

question. Even though we can find diverse qualitative methods, one in particular offers the

best conditions for this study: the case study.

IV.2 Research Design

While it is true that the research approach used in this study is in general interpret ive

and the type of information observed and the type of data that support the conclusions of

this study are qualitative, the case study, the method I chose for this dissertation, according

to Myers can be positivist, interpretive, or critical (Myers, 2013). Research method

literature offers diverse approaches to case study, and these approaches can vary in their

fundamental perspective about reality and the production of knowledge. This dissertation

follows the work of Yin (Yin, 2013), who offers several descriptions and explanations of

the case study method.

34

Yin, in his book Case study research: Design and methods, says that: “A case study

is an empirical inquiry that investigates a contemporary phenomenon within its real-life

context, especially when the boundaries between phenomenon and context are not clearly

evident” (Yin, 2013, p. 16). Additionally, Yin states that case studies constitute the best-

fitted research methodology when researchers have limited or no control over events and

the emphasis is on explaining contemporary facts in a real-life context. Furthermore, Yin

maintains that case studies are specifically useful for studying, “why” or “how” research

questions. The case study method resulted thus the best research methodology to conform

this dissertation for several reasons: 1) The research focuses on a contemporary business

situation (the implementation of a microfranchising model engaging the BOP). 2) We

conducted the research in a real-life setting (the Mexican agribusiness industry). 3) The

researcher had limited or no control over facts appearing in the target setting. 4) The

question this research aims to answer is a “how” question, which implies a process

perspective and qualitative analysis.

The chosen methodology, case study, normally uses theory-driven data collection

and data analysis, frequently collected from multiple data sources. Using multiple data

sources allows the researcher to converge lines of inquiry, which is what Yin calls the

process of triangulation in the data mining. Yin proposes four ways to carry out the

triangulation: Triangulation of data sources, triangulation using different evaluators, of

lenses to analyze the same data, and triangulation of methods (Yin, 2013 p. 120). In this

dissertation, the triangulation of data sources is essential for the validity of the conclusions.

This process of triangulation suggested by Yin implies that the researcher not only uses

different sources for data collection, but also the use of those data to reconfigure further

35

data collection to corroborate the initial findings. This triangulation implies in this research

that data collection and data analysis were done in a parallel, iterative and continuous way,

rather than doing data collection and data analysis as separate processes. As I described in

section 5.1, I assured the accomplishment of data triangulation by collecting multiple kinds

of information from diverse sources located in completely different contexts. The

triangulation required to claim validity of the conclusions was pragmatic in providing

transparency to the data analysis given the early analysis of the first data coming from

multiple sources of information that later guided the design of the subsequent data

collection.

I could describe the research method chosen for this dissertation as being a theory-

informed case study, in which the theoretical framework determined the design of both the

data collection and the data analysis processes. As written in chapter 3, I collected data

based on dialectics. The dialectical approach offered a theoretical thus rigorous focus to

the data collection process providing an emphasis on the concept of tension and

contradiction. In that way, dialectics allowed the researcher to focus on the dialectica l

constructs to be selective in the data-mining process made in the case study. The essential

constructs and perspectives taken from dialectics—and contextualized with constructs and

perspectives from microfranchising knowledge—also informed the study’s analyt ica l

approach (see TABLE 7 in APPENDIX 1).

IV.3 Strategizing Process

In spring 2014, a team of three students and our advisor from the Executive

Doctorate in Business Program at GSU initiated the engaged scholarship research project

(Andrew H Van de Ven, 2007b). The team included Late Lawson-Lartego, a professiona l

36

from CARE; Sergio Quinonez, the Chief Business Officer from ANSA; Dr. Lars

Mathiassen, the advisor and an Innovation Researcher at GSU; and me, a Business Ethics

Professor in Mexico. Our team’s key challenge was to develop strategies for market

expansion and growth at ANSA, while at the same time meeting the ethical responsibilit ies

that firms have when obtaining profit while working with poor people.

We reviewed cases in the literature on how to engage the BOP and explored

business strategy theories that could inform problem solving at ANSA. This led us to adopt

DCT (Teece, Pisano, & Shuen, 1997), ODS, and the Asset Hexagon Framework as a

theoretical foundation for collaborating with ANSA managers. Based on these init ia l

insights into how managers might strategize BOP opportunities, we developed a detailed

proposal for collaboration with ANSA. Table 2 summarizes the entire action research

process.

IV.3.1 Committing to BOP Strategizing

In late April 2014, our team presented and discussed the material in a two-day

workshop at GSU with ANSA’s Top Management Team (TMT), which consisted of the

company’s President, the Chief Executive Officer (CEO), the Chief Commercial Officer

(CCO), and the CBO (who was also a member of the research team. The workshop covered

several agenda items, including: a) introductions of the ANSA TMT and the research team;

b) presentation of ANSA, including company background, business model, key financia ls,

future plans, challenges, and opportunities; c) presentation of the research proposal,

including material on the BOP and the adopted theoretical framework; and d) presentation

of successful BOP business cases.

37

At that point, ANSA faced two key challenges: suppliers were interested in

shortening the supply chain and reaching out directly to farmers in Mexico, thereby

bypassing ANSA; and the company lacked a long-term strategic plan to contend with the

first challenge. It was clear from discussions at the workshop that ANSA TMT viewed

engaging with the BOP as an innovative proposition.

IV.3.2 Exploring Options

The workshop afforded the research team a deeper sense of the challenges and

opportunities ANSA faced. Drawing on insights gained from analyzing ANSA’s situation

through the lens of DCT, the research team applied ODS theory to create an initial set of

options available for further development and refinement based on interactions with the

TMT and other key stakeholders. After presenting market information, industry analysis,

and some successful business cases engaging the BOP, we focused on the following six

options:

Option 1: Develop a BOP joint venture with select multinational suppliers. This option

aligned with the multinational suppliers’ interest in shortening the supply chain and

reaching out directly to BOP farmers.

Option 2: Offer specific products and services to BOP farmers. Smaller packaging of

products was one specific option to explore.

Option 3: Identify strategies for engaging BOP farmers. Such strategies include

technological solutions such as mobile phones for accessing markets and linking

farmers to other resources such as financial services, government farm subsidies

programs, and available equipment for storing corn.

38

Option 4: Develop tools for BOP self-organization, including information centers,

community meetings, and workshops.

Option 5: Provide support for helping distributors target BOP farmers. More than 75%

of the 1,350 distributors in ANSA’s network are small- and medium-size businesses.

Option 6: Develop a franchise model targeting BOP farmers. The franchise could be an

alliance with interested distributors to create a branded distribution platform, with the

mandate to serve BOP farmers in a cost-effective manner.

The research team reviewed the initial six options following interactions

with the TMT and other key stakeholders, including BOP farmers, local distributors,

suppliers, and ANSA’s mid-level and regional managers. Given the amount of time

available for this action research and the wide geographical presence of ANSA in Mexico,

the research team interacted with key informants in strategically selected geographies

where BOP farmers represent the majority of ANSA customers.

For four days in July 2014, two members of the team traveled to Cihuatlan, Colima,

Autlan, Tepatitlan, Zapotlanejo, and other corn and vegetable production regions. This

allowed the research team to gather rich data about the reality of the BOP. An important

objective was to evaluate the six initial options for engaging the BOP network.

One surprising finding was that the BOP farmers we interviewed did not have

appropriate commercialization channels for their products. The main challenge for BOP

producers and, as we found on this trip, local BOP distributors as well, was the need to

develop a reliable market for their harvests.

With this information at hand, we held a second workshop with the TMT in late

August. Our objective was to discuss and explore the five options and decide on which to

39

implement through an initial pilot test. After providing evidence, sharing testimonials, and

presenting possible alternatives, the conclusion was to focus on developing a franchise

model that could combine all five options. The perception was that a franchise approach

could effectively support expansion of ANSA’s market while also co-creating value with

BOP farmers.

One of the main outcomes of the second workshop with the TMT was the

creation of a task force to design and validate the business model for the new venture. The

task force included managers from various departments at ANSA, and the CBO would be

the leader of this team.

In early September 2014, the task force convened for a kick-off meeting. The team

hired a legal firm to explore and suggest the legal status that would best fit the new venture;

it decided on a franchise. The task force concluded its first meeting full of energy and with

much work to do.

IV.3.3 Designing AgroEstacion

Two weeks later, the task force presented a list of suggested brand names and

ANSA’s TMT chose “AgroEstacion™” (Agro-Station) as it best reflected the business

model: a one-stop store where BOP farmers can access agricultural inputs, technology

solutions, and advice, as well as sell their harvest. The task force also developed detailed

procedures for each franchisee to follow in terms of operation, taxation, logistics, cost

structure, IT services, and general business practices.

The essential goal of the strategy was to reach a new unexplored market for ANSA

and to co-create value with the BOP and its network. To achieve this vision, the task force

40

decided to engage deliberately the existing local BOP distributors with the value

proposition of converting them into franchisees, rather than opening new ANSA

AgroEstacions and competing against these distributors.

For franchisees, the intrinsic benefits of being part of the AgroEstacion

platform included business growth, assets control, access to financial services (includ ing

working capital), and knowledge and new technologies. Figure 3 illustrates AgroEstacion’s

business model.

Figure 3. AgroEstacion Business Model (Cazares et al., 2015)

41

IV.3.4 Implementing AgroEstacion

In early December 2014, the research team held the third workshop with the task

force and the TMT to discuss outcomes and refine the plan for realizing AgroEstacion. The

meeting’s primary outcome was the decision to simplify the model and reduce the services

offered by the franchisees to the BOP farmers. The focus would be on maintaining as

simple a portfolio as possible by offering BOP farmers: credit, agrichemicals, seeds,

technical advice, and brokerage of their production.

The research team also held a meeting with an industry expert who operates in a

different region of the country to get his feedback on the business model, the feasibility of

the financial model, and the equity structure of AgroEstacion. The expert found the

AgroEstacion model attractive, with a high potential for success.

In early February 2015, the task force and the TMT met with two of the BOP local

distributors. At that meeting, the AgroEstacion platform and franchise concept was

presented—this time with all financial and legal details—along with the layout concept of

the store. At this meeting, one BOP local distributor signed on to become the first

franchisee; some weeks later, the second attendee also signed.

At this stage, AgroEstacion was established as a new company and the first

employees were working directly with the first two franchisees so they could begin

operations during the summer, after the rainy season. Next, the plan was to have another

group of two to three franchisees join during the winter of 2015. In March 2015, a task

force member was appointed Director of AgroEstacion, with the responsibility of rolling

out the business across ANSA’s markets. By November 12, 2015, the first franchisee store

was open for business.

42

IV.3.5 Planning Growth

Currently, the AgroEstacion team is working on establishing an Executive

Advisory Board, creating roadshows with suppliers and distributors, and scouting for

possible partners and new franchisees. In addition, an unexpected offer came in from one

of the world’s biggest multinational suppliers: It proposed collaborating with ANSA to

create a chain of stores aimed at final consumers.

This process of designing, implementing, and diffusing AgroEstacion offers

the opportunity for a qualitative longitudinal case study to capture, organize, and analyze

events and major contradictory forces ANSA faced and is facing as it implements the

AgroEstacion microfranchising model to engage the BOP. I will use the rich data collected

through the action research in a dialectical analysis of key events identified in the

implementation process.

43

Table 2. Action Research: Problem-Solving Phases

Phase Activities

I Committing BOP Explore strategic and ethical business issues within ANSA

Conduct a workshop with ANSA executives Discuss ANSA’s history and its current situation, challenges, and

opportunities

Discuss the BOP proposition and cases

II Exploring Options

Conduct workshops and Skype meetings with research and executive teams

Analyze ANSA challenges and opportunities Identify available BOP options

Collect data and analyze/dilute options

Interact and discuss with executive team Conduct workshops with task force and consumers

Conduct workshops with research team, executive team, and task force

Develop actionable options

III Designing AgroEstacion

Conduct workshops with ANSA executives

Select major option (microfranchising)

Transform task force into AgroEstacion team

Design AgroEstacion business franchise concept and select

distributors for partnership

Design AgroEstacion plan, including processes, models, and

manuals

Begin initial training process for franchisees (downstream)

Sign bailment contract (equipment)

Handle legal issues (registration, contracts, and trademarks)

Build the model store in Tlajomulco town

IV Implementing AgroEstacion

Design the commercial and cross-learning processes (for ANSA and franchisees)

Conduct workshops with the research and AgroEstacion teams

Launch first two franchise stores Initiate the second training process for franchisees

Designing the Growth Forum

V Planning

Growth Develop the Executive Advisory Board

Introduce the AgroEstacion business model to suppliers and government officials

Scout candidates for the next two franchisees

44

V DATA COLLECTION AND ANALYSIS

This research project took place over two phases; here, I describe the different

activities we (the research team) performed in each.

In a preliminary phase we conducted an action research, which included several

primary activities. These were (Figure 4 in Appendix 2 shows this model):

Introduce the BOP literature

Review selected BOP cases relevant to the company

Introduce the theoretical frameworks (DCT, ODS, and the Asset Hexagon)

Begin the action research

Collect data

Apply ODS theory for problem solving

Design the Integrated Model for BOP Strategizing

Apply the integrated model to create a new entity

The second phase of research was a longitudinal case study for a single researcher.

As Table 3 shows, the main activities I conducted in the case study phase were:

follow-up on data collection to validate and capture recent developments in

AgroEstacion

Conduct detailed analyses of all data from both the action research and case

study phases

Develop a comprehensive empirical account of tensions that managers

faced; further develop a dialectical model and propositions

Draw conclusions.

45

Table 3. Research Phase Activities

Research Phase Activities

Phase 1: Action Research

Introduce the BOP literature

Review select BOP cases relevant to the company

Introduce theoretical frameworks: Dynamic

Capabilities Theory (DCT), Option-Driven Strategizing

(ODS), and the Asset Hexagon

Begin action research

Collect data

Apply ODS theory

Design the Integrated Model for BOP Strategizing

Apply integrated model to create a new entity

Conclude first action research stage and write/publish

preliminary findings

Phase 2: Longitudinal Case Study

Follow-up on data collection to validate and capture

recent developments

Conduct detailed analyses of all data from both the

action research and case study phases

Develop a comprehensive empirical account

Further develop a dialectical model and propositions

Draw conclusions

V.1 Data Collection

As is true of all action research, the first research phase—the collaborative work

with ANSA—had two parallel and complementary objectives. On one hand, our aim was

to help the TMT develop and implement a sustainable strategy targeting BOP farmers; on

the other hand, we sought to develop new empirical insights and theory on how managers

can strategize the co-creation of value with the BOP. We held three workshops with the

TMT, conducted 23 semi-structured in-person interviews and one focus group with key

stakeholders in ANSA’s value chain. We also organized four field trips to local distributors

and farmers and participated in a task force to implement the proposed strategy. Following

Yin (2003) and Miles and Huberman (1994), we traveled to different regional locations to

develop and validate findings based on the triangulation of data from multiple sources. In

addition, the research team met every other week throughout the process to review data

46

and experiences, discuss and develop theory, and prepare material to support continued

problem solving at ANSA. We had full access to company documents such as financ ia l

information, sales reports, the customer database, internal presentations, emails, and other

written materials. These secondary data sources complemented our primary data. Table 4

summarizes our primary and secondary data sources.

Table 4. Data Sources

Primary Secondary

Workshops with the TMT (3)

Research team meetings to develop workshop materials and options (bi-weekly)

Focus group with middle management team

Semi-structured interviews Farmers (10) Distributors (6) Regional Managers (3) Suppliers’ executives (2) Industry expert Potential partner

Staff meetings Task force recruiting Lawyers consultancy (2) Business plan (5)

Field Observations Stores layout Warehouse operations

ANSA documents Market and industry information Sales reports Customer data

Research team documents Available strategic options Actionable Options Work plan for task force

Data collection started after the initial workshop with the TMT in Atlanta, Georgia,

in April 2014. We organized the two subsequent workshops with the TMT at ANSA in

Guadalajara, Mexico, in August 2014 and December 2014. We conducted most of the

interviews and focus groups between the first two workshops to inform our strategy

development. ANSA organized the task force in collaboration with the research team

immediately following the second workshop. The task force worked intensively over the

47

next several months to refine and implement the developed strategy at the second

workshop. Most data collection took place in Spanish at different locations in Mexico; with

workshops, we tape recorded interviews and focus groups and later transcribed them into

English. The interview protocol had two sets of questions: one focused on understanding

the BOP and the firm’s network, and the other focused on validating and adapting strategic

options. A key challenge for our research team was the need to adapt academic termino logy

and language to the simple, direct, and colloquial language used by BOP farmers and other

agribusiness stakeholders in rural areas of Mexico.

In the second research phase, I used the collected data from phase one to identify

and analyze tensions and contradictions in the implementation process. I also collected new

qualitative data from primary and secondary sources. I began this data collection in early

2015 through observation, voice recording, and note taking during AgroEstacion meetings.

I also conducted ANSA executives leading the implementation process of AgroEstacion

The goal of these follow-ups was to see how key events in the implementation process

implicated contradictory forces and how the actors maneuvered these tensions and, in so

doing, made alternative choices and solutions possible.

V.2 Data Analysis

This research is based on the process of data analysis suggested by Miles and

Huberman (1994) for a qualitative case study. This describes data analysis as conformed

by “three flows of activity: data reduction, data display, and conclusion drawing and

verification” (see Figure 4). The three activities that conform the process of data analysis

together with data collection integrate an interactive process; the researcher works within

48

those four activities during data collection process and then within the three types of

analysis during the rest of the research.

Figure 4. Data Analysis Approach (From Sing, 2011)

V.2.1 Data Reduction

Data reduction, also called data condensation, can be defined as the process in

which the researcher organizes collected data by sharpening, focusing, sorting, and

discarding information (Miles & Huberman, 1994). As Miles and Huberman suggest, in

order to facilitate analysis and improve validity, I implemented traditional methods for

synthetizing data, such as tables to visualize information provided by different sources,

document summaries, discussion meetings, drafts to organize conclusions; I also used

different perspectives for coding. I used these methods continuously throughout the

project’s life and always from a dialectical perspective; I considered the main constructs

of dialectics to select data and support my conclusions as follows:

Once we had collected the data, as previously described, I identified major stages

or time brackets in the implementation process of AgroEstacion, the microfranchise model

to engage BOP. This process allowed organizing data from interviews, meetings and

49

workshops as well as secondary sources such as documents, project materials, meetings

and procurement reports in a chronological way. As previously explained these five major

phases were: committing to BOP, exploring options, designing AgriEstac ión,

implementing AgroEstación, and finally planning growth.

From the information obtained in this exploratory data collection, I observed, and

documented, the major tensions araising during each phase of the implementation process.

As described by Van de Ven & Poole, a tension is a “struggle of bipolar opposites for

control”. An event-based concept that happens in a given moment of time, it can be

observed, and eventually solved (Van de Ven & Poole, 1995).

Once those different tensions were identified, in order to be able to classify them

and latter be able to identify patterns of tensions and possible patterns of manager ia l

maneuvers made to solve them, I needed to place those tensions in a locus of the

strategizing process. I took the four elements (processes) of the integrated model for

strategizing value co-creation with the BOP, that emerged in the action research project

(Cazares et al., 2015). Those four elements in the model are; firm network, BOP network,

strategizing, and value co-creation (see Figure 2).

Once I identified the tensions, I classified them in smaller groups (see Table 7 in

Appendix1). Those groups were categories of tensions took from Smith and Lewis (2011).

The possible categories were:

Performing Tensions

Organizing Tensions

Belonging Tensions

Learning Tensions

50

After identifying tensions and categorizing them, I describe in the subsequent

Results section, the managerial maneuvers observed to solve each tension, those maneuvers

that made possible the successful implementation of AgroEstacion.

Finally, I synthetized the managerial maneuvers observed, matching each of them

with one of the possible maneuver types. These maneuver types match the four strategic

responses identified by Poole and Van de Ven (Poole & Van de Ven, 1989)

1. Acceptance, keeping tensions separate and appreciating their differences

2. Spatial Separation, allocating opposing forces across different organizationa l

units

3. Temporal Separation, choosing one pole of a tension at one point in time and

then switching

4. Synthesis, seeking a view that accommodates the opposing poles

In this frequently used typology, the first strategy focuses on acceptance, whereas

the last three seek to resolve the underlying tensions. The four categories can be further

explained by the integrated model presented by Smith and Lewis in 2011, in which they

group the four possible ways of addressing tensions according to the outcome of the

managerial action.

1. Resolution. That implies choosing one of the two opposites, A or B. The

Hegelian Dialectical Theory describes this pattern as the domination of one

opposite force over the other.

2. Accommodate. This pattern of managerial maneuver to address tensions, is a

variation of the previous one, Resolution, because this also aims to resolve

51

tension but not through the domination of one force over the other, but by

accommodating, or conciliating both antagonistic positions, A and B. In the

classical dialectical theory, it would be the synthesis of the thesis and antithes is.

3. Acceptance. This third pattern is not looking for a solution to the tension. These

managerial maneuvers embrace tensions and look to be able to work through

the tension and coexist with it. Not solving through choosing one of them, nor

conciliate the opposites in an intermediate position, but assuming the influence

of the struggle between the opposites.

V.2.2 Data Display

The second type of data analysis activities described by Miles and Huberman

(1994) is data display which consists of organizing information into accessible and

compact elements such as matrices, tables, graphs, maps, or even models. Like data

reduction, making data displays involves iterative processes that occur during and

following the data collections process. For this case, displays ordered by stages, tensions,

category of the tensions, and observed managerial maneuvers might be helpful in

compressing and ordering data to facilitate coherent conclusions. To enhance

generalizability and deepen understanding and explanation throughout, these single case

displays might be arranged in a general-table that could be later synthetized to allow

systematic analysis (Miles and Huberman 1994, P. 176). Being a process study, time-

ordered displays such as event listings were particularly helpful in data analysis by

presenting a list of events organized by chronological time phases and the tensions

observed in each period sorted by significant categories, creating a time line of the

implementations process. My research identifies specific tensions in the empirical account

52

and then theorizes general contradictions across these tensions, and management

maneuvers.

V.2.3 Conclusion Drawing and Verification

Conclusion drawing and verification is the third type of activity in Miles and

Huberman’s data analysis process. It is a set of activities that mixes in time and type of

documents generated with data reduction and data display. These are processes that are

usually performed after data collection, but as Miles and Huberman describe, they iterate

with new rounds of data collection making conclusions more explicit and supported by

facts and evidences grounding the study to tangible data. (Miles & Huberman, 1994).

VI RESULTS

Around November 2013, we were a group of researchers that initiated the action

research project with the Mexican agribusiness ANSA to help the organization develop a

future strategy of the firm by engaging with the BOP markets and at the same time to

produce interesting insights about corporate responsibility and sustainability. I offer a

retrospective, dialectical analysis of the resulting collaboration with ANSA in five

chronological phases, each highlighting the tensions that manifested and identifying the

location of the tension as it relates to the integrated model for strategizing value co-creation

with BOP (Figure 2). Table 5 summarizes the different phases of the process, the activit ies

carried out in each phase, and the involved tensions.

Table 5. Chronological Observation of Tensions in the Strategizing Process Phase of the BOP

Strategizing

Activities

(Implementation of

AgroEstacion )

Tensions

Opposite A vs. Opposite

B

53

I. Committing BOP Explore strategic and ethical business issues

within ANSA

Conduct a workshop

with ANSA executives

Discuss ANSA’s history

and its current situation, challenges, and opportunities

Discuss the BOP proposition and cases

1) Supplier goals vs. ANSA practices

2) Profit generation vs. Social

commitment

3) Emergent BOP engagement

vs. Deliberate BOP

engagement

(Mintzberg,1985)

II. Exploring Options Conduct workshops and

Skype meetings with research and executive

teams

Analyze ANSA

challenges and opportunities

Identify available BOP options

Collect data and analyze/dilute options

Interact and discuss with

executive team Conduct workshops with

task force and consumers

Conduct workshops with research team, executive team, and task force

Develop actionable

options

4) One supplier vs. Multiple suppliers

5) ANSA quality proposition to

farmers vs. current farmer practices.

6) Opening ANSA stores vs.

Developing current distributors

7) From inside ANSA vs. Within new business venture

54

III. Designing AgroEstacion

Conduct workshops with ANSA executives

Select major option (microfranchising)

Transform task force into AgroEstacion team

Design AgroEstacion business franchise concept and select

distributors for partnership

Design AgroEstacion plan, includ ing

processes, models, and manuals

Begin initial training

process for franchisees (downstream)

Sign bailment contract (equipment)

Handle legal issues (registration, contracts,

and trademarks)

Build the model store in

Tlajomulco town

8) Franchised distributors vs. Independent distributors

9) Agrochemicals retail vs. Corn brokerage.

10) Exclusive supplier to franchisees (volume of the revenues) vs. Provider of business services

IV. Implementing AgroEstacion

Design the commercia l and cross-learning

processes (for ANSA and franchisees)

Conduct workshops with

the research and AgroEstacion teams

Launch first two franchise stores

Initiate the second training process for

franchisees

Design the Growth

Forum

11) Resourceful franchisees vs.

Representative franchisees.

12) AgroEstacion as an ANSA

revenues booster vs.

AgroEstación as an

independent business unit.

55

V. Planning Growth Develop the Executive Advisory Board

Introduce the AgroEstacion business

model to suppliers and government officials

Scout candidates for the

next two franchisees

13) AgroEstacion vs. Agro-

aliANSA

VI.1 Committing BOP

The first step in the action research starting December 2014 was to define the

diverse perspectives we could adopt to develop an interesting collaboration with ANSA. I

was personally interested in business ethics; another researcher was involved in an

international NGO focused on healing hunger in the poorest regions in the world; and the

third researcher, who was part of the TMT in ANSA, was interested in developing a

substantial contribution to the company. Our advisor and leading researcher guided the

discussions to get an interesting project with potential to contribute to both practice at

ANSA and to theory.

We began by gathering as much information as possible about critical events that

had shaped the company’s trajectory. This included antecedents to the status of the

company; details of critical events and how the company had confronted them; the most

relevant evidence, including growth in business, data about the company’s performance,

reputation as a company, and its corporate sustainability profile. We identified five key

events in ANSA’s history that were indicative of the company’s dynamic capability:

- Mexican banks had earlier suspended credits to farmers, so ANSA allied with

suppliers to provide that service

56

- US and Asian markets had requested “organic” berries, that is, nurtured and

controlled without chemical pesticides, so ANSA developed required inputs

- The CCO pushed to diversify ANSA’s suppliers to include innovative, smaller

suppliers in addition to the few big transnational corporations

- Crime and violence issues made ANSA retract from certain market regions, while

providers pressured ANSA to continue in those areas

- New taxes for agrichemicals calculated by the toxicity of the pesticide had forced

ANSA to rethink its product portfolio

At the same time, we searched in the literature to identify streams of research we

could potentially contribute to: Corporate social responsibility, poverty alleviation, food

production, social commitment, business strategy, sustainability, environmental challenges

in food production, and others. With that background, we were ready to propose ANSA to

engage in action research collaboration to help them develop a strengthened approach to

corporate social responsibility by engaging with BOP markets. As a result, we started to

organize a workshop with ANSA’s TMT to get detailed information about the current

challenges of the company. The meeting could also give us more insights about ANSA

trajectory, business model, key financials, plans, and opportunities that would help us to

refine the project scope. The key objective was to measure the willingness of ANSA’s

TMT to engage in research collaboration and if so, begin to create trust.

Accordingly, during early spring of 2014, we conducted a workshop meeting in

Atlanta with the President of the board, the CEO, the CCO, and the CBO. We presented

available information about ANSA business model, industry players, distribution chain,

and financial model. The TMT provided very valuable perspectives as well as additiona l

57

detailed information that helped organize the project. Specifically, the workshop allowed

the research team to learn more about ANSA’s history and profile. ANSA started

operations in 1977; the main resource it developed over time was an extensive network of

distributors: around 1,250. Some of these local distributors had also developed over time,

growing from improvised small stores to strong local distributors with extensive networks

of customers, infrastructure, and technical knowledge. These characteristics of the local

distributors attracted the attention of commercial teams in big multinational suppliers. The

CBO described this phenomenon saying: “…the ants are becoming elephants.”

Here I present some evidence of the bargaining power of suppliers and the type of

their relationship with ANSA: In 2014, Dow Agro sciences, one of the main players in the

agrichemical industry worldwide, reported revenues of $7.3 billion worldwide, out of that

$96 million came from Mexico. That same year, ANSA represented 25% of Dow’s sales

in Mexico, and Dow’s products represented 32% of ANSA sales. It was clear there were

strong interdependences between the company and its transnational suppliers. In the words

of the CCO: “Our relationship with our suppliers is as important as the one we have with

our customers.” The CCO also emphasized ANSA’s role in managing MNCs’ assets as

distributor of their inventory and their technology to farmers: “That was something MNCs

cannot do given the market’s size, cultural diversity, and geographic dispersion.”

The TMT pointed out an important threat that the transnational suppliers, driven by

pressures from their headquarters, began to prospect downstream to local distributors,

ANSA’s direct customers, to transform them into direct distributors for the MNCs thereby

bypassing ANSA. The Mexican representative of one of these transnational giants later

expressed, “In general the distributor (ANSA) covers a priority that is the risk of operation

58

the retail process. The second important part that justifies the distributor’s existence is

creation of demand, the job of the distributor. If the distributor does not create demand,

the supplier ops for going directly.” He added, “I don’t see how ANSA’s strategic position

could be sustainable without changes; we are looking to shorten the supply chain.”

In this very early stage, we can identify a first tension between two contradictory

forces located in the firm network process (see Table 6): Suppliers goals vs. ANSA

practices. On one hand, suppliers are interested in shortening the supply chain, eliminating,

if possible, intermediaries and trying to reach as directly as possible the final customer. On

the other hand, ANSA is interested in strengthening existing practices by trying to diversify

suppliers and develop loyalty with their local distributors, based on the idea that it is

essential to understand the diverse needs in each region and crop. In later data collection,

we confirmed this fact about supplier’s goals, a different MNC’s country manager told us,

“There is a threat for ANSA, because the local distributor is getting a lot of attention from

other big distributors and also from big transnational companies.”

Interestingly, adopting a BOP oriented business strategy could reconcile both

antagonist positions, providing MNCs additional revenues coming from new unexplored

markets and giving ANSA the chance to deepen its competitive advantages and main

assets, which were the knowledge of regional markets and the leadership with small and

dispersed markets. The same MNC’s manager, “Two years ago we start pushing our

distributors to increase their presence with the final user (The farmer), and some

distributors were confused about this message, because in the past we used to tell them

differently. What we are looking for now is the big distributor such as ANSA needs to

strengthen its participation with the final user.”

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The workshop developed an exceptional ambience of trust and mutual

collaboration. At this point, the TMT expressed then a general concern about the project ;

the CCO said, “The Mexican agribusiness context is quite different from the rest of the

world, specifically the USA, and I am worried that we intend to implement strategies

designed in the USA that will not work for sure in Mexico.” They were afraid that

conclusions and possible suggestions we could contribute could be very US-oriented

business solutions, unsuitable to the Mexican context. We needed to propose some possible

business course tailored for that emerging economy.

We introduced the BOP proposition. “More than half of the world is poor,” stated

the leading researcher, “and we cannot expect the governments or the Bill Gates’ of the

world to solve this issue. It must be resolved through businesses—large, medium, and small

ones—participating in the BOP segment, doing business, and making money in this

process, contributing to poverty reduction. This is what we want to propose to ANSA, to

expand its business by doing more with poor farmers.” They were surprised with the focus

of the proposal. We therefore presented to the TMT cases of companies around the world

successfully engaging with the BOP so that the TMT could visualize the possibility of

orienting ANSA’s strategy to include BOP engagement. The cases were diverse and taken

from various industries and markets. Some of them were Mexican cases well known for

their commercial and financial success, other were from other emerging economies that

illustrated how diverse and creative could be the BOP engaging.

“We once sold agrochemicals to Cuban farmers; they used telex, we

provided a fax machine and they began to use it to buy from our competitors” The president

of the board expressed skeptically, “ANSA was founded to produce money and respond to

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investors, we support very much our collaborators paying training and other of their needs,

but business is business.”

Here is the second tension I observed; this one is located in the value co-

creation process (see Table 6): Profit generation Vs. Social commitment. When exploring

a business engagement with the BOP, most business managers believe that profits should

come from traditional middle to high purchasing-power markets; Another rooted believe

is that the wealthier the customer is, the bigger the economic benefit that companies can

obtain. Engagement with the BOP is not a strategic issue in companies; at least ANSA’s

TMT did not relate this to income, commercialization nor business sustainability, they

visualized BOP engagement more related to philanthropy or corporate social

responsibility; and they used to see profit generation and social commitment as competing

forces in struggle.

“I think we are already serving the BOP,” said the CCO. “A lot of

customers buying from our distributors are poor farmers that work very small land

extensions. Somehow we are already serving them.” Although the research team

recognized this fact, we kept pushing to explore the possibility of constructing a defined

strategy for this market. The executives of the TMT were reluctant to invest and devote

human, physical and financial resources to a business strategy focusing exclusively on BOP

markets, despite the fact that they had considerable data and knowledge that related to the

BOP proposition in the firm’s context. “We could develop special product lines to that

market, smaller presentations, simpler services…this way we could expand our scope.”

ANSA executives shared other contrasting experiences in dealing with the BOP segment;

“Some years ago, we discovered that, at that time, all the distribution companies in the

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central states of Mexico were fighting to get one client that used to be the biggest in that

area. And, after a research was made by a sales rep, we discovered that there were a lot

of small businesses and small farmers unattended, because everyone wanted to have the

big customer.”

The third tension I observed during this first phase of the implementation, also

located in the value co-creation process, was the struggle in TMT when deciding between

adopting a Deliberate BOP engagement strategy Vs. an Emergent BOP engagement

strategy. The difference is crucial in the successful and enduring BOP proposition. The

first one implies looking at the BOP as the main target market. This deliberate engagement

implies products and services focusing on the needs and circumstances of this specific

population, adapting times, processes, financial tools, and expansion plans with a total

focus on BOP population. The emergent BOP engagement would rather be a fortuitous

opportunity to serve BOP markets using the traditional means, having designed the strategy

not focusing on BOP population but on the traditional markets. The tension is

comprehensible given the challenge of deliberatively serving a market that business

managers usually despise. In addition, we have to understand that BOP engagement might

seem a risky decision due to the heavy dependence on the local distributors to activate the

BOP network. As the CCO expressed during the workshop: “The BOP market is a difficult

and risky one, surrounded with huge uncertainty.”

VI.2 Exploring Options

The BOP idea began to take shape in the workshop. Brainstorming gave us a lot of

material to produce a set of options to explore with ANSA’s TMT. In this process of

generating, enriching, merging and even discarding possible courses of business strategy,

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I denominate Exploring options as the second phase in the strategizing process for

implementing AgroEstación. This phase includes the following activities (see Table 5):

Conduct workshops and virtual meetings with research and executive teams to speed

the implementation process

Describe ANSA challenges and generate opportunities

Identify Possibilities to engage with BOP population

Collect more data and iterate and enrich options

Participate in meetings and discuss alternatives with executive team

Conduct workshops with task force and consumers to validate data and generate new

options

Conduct workshops with research team, executive team, and task force

Develop actionable options

Based on the research team meetings, we integrated the preliminary ideas into six

available options:

Option 1: Develop a joint venture (JV) with one of the MNCs suppliers who showed

interest in shortening the supply chain

Option 2: Develop a catalog of specific products, designed for the BOP farmers,

according to this segment farmer’s purchasing capacity

Option 3: Identify strategies for engaging BOP farmers

Option 4: Develop tools for BOP self-organization, such as information centers,

workshops, and knowledge-sharing meetings

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Option 5: Help distributors target BOP farmers. ANSA’s local distributors are

mainly small and medium-sized businesses; The company could exploit these

established businesses, providing them with training and IT support

Option 6: Develop a franchise model for the BOP farming market

When discussing these options, several tensions came into view. The fourth tension

was between having One supplier Vs. Multiple suppliers. Located in the firm networking,

this fourth tension related to developing a joint venture with one of the MNCs that supply

ANSA. This possible venture revealed a source of continuous conflict and antagonism with

the global giants within the agrochemical industry. In the voice of one MNC’s commercia l

manager for the country, “We think that a macro distributor should be engaged with just

one big supplier, this shows full commitment.” Implementing the JV would imply changing

the ANSA practice of having multiple suppliers. This practice of having multiple suppliers

has allowed them to enrich product portfolios and, more importantly, to diversify the risk

of depending on one supplier only, which would increase the bargaining power of the

MNC. The CBO said, “Having products from different suppliers makes us more

competitive in the market, local distributors ask for multiple brands, and puts us in a more

respectable position with the MNCs.”

This fourth tension was located according to the Integrated Model for Strategizing

Value Co-Creation with the BOP, in the Firm Network of the upstream relations that any

firm should activate in a value creation process (see Figure 2). The conclusion was that

ANSA should continue with the diversification practice in buying and distributing products

and technology from different suppliers. This decision implied that ANSA had to develop

a very innovative and powerful strategy to, on one hand, satisfy MNCs’ ambition for new

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markets and revenue growth and, on the other hand, keep the bargaining power that ANSA

had developed at that time.

In the second week of July 2014, we visited Cihuatlan, Jalisco, a small coastal town.

The main economic activity in Cihuatlan is agriculture. Some farmers own big portions of

land, but there are also small BOP farmers. We interviewed mainly BOP farmers with the

objective of gathering data about this sector’s reality and their conditions, using the model

of the asset hexagon as a guide. The data obtained from these interviews showed that

information obtained at the TMT workshop in Atlanta was accurate: BOP farmers faced a

lack of basic agriculture inputs, including credit and tools (such as machinery and irrigat ion

systems). When we asked the BOP farmers to prioritize their needs from more important

to less, the top priority was unexpected and the more interviews we held, the more we

confirmed that surprising answer: “Who is going to buy my crop?” One of the farmers

anxiously exclaimed: “What we really need is the certainty that our crops are going to be

bought and paid. After harvest, our crops end up in the hands of the ‘coyotes’ (the Mexican

slang for pernicious middlemen) and they always take a long time to pay us.” Another one

asked, “Do you think there is a possibility that I could pay the supplier debt with part of

my crop? That would help me a lot.” As said before, neither ANSA’s executives, nor the

research team predicted that the main concern for the BOP farmers in this region was the

absence of a secure commercialization channel for their products.

We traveled to different regions in western Mexico interviewing local distributors.

The objective was to validate the commercializing channel issue expressed by the farmers

from Cihuatlan. This region was different from Cihuatlan in terms of weather, crops, and

the farming cycle. However, the conclusions about BOP farmer concerns were identica l.

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As the distributor we interviewed in Tepatitlan town said, “My clients have a lack of cash

flow, self-organization, and information.” Local distributors confirmed that farmers’ main

need was a reliable and stable market for their harvest. A second distributor we interviewed

in Zapotlanejo confirmed this point, “My customers prefer to buy products (pesticides,

fertilizers, and seeds) from the coyotes who sell those products at very high prices, but

accept harvest as payment.”

This information revealed a tension located in the BOP network (see Table 6). This

fifth tension was the challenging struggle between ANSA’s quality proposition to farmers

Vs. Current farmers’ practices. On the one hand, ANSA’s traditional way of gaining

market participation was offering high-tech products and professional support, trying to

maintain the cost of farming as low as possible, with a very tight credit policy. On the other

hand, BOP farmers were used to paying high prices and getting unfair conditions from

coyotes. They obtained a very attractive incentive paying with their harvest and having the

chance of selling their crops to the coyote. This payment way implies to get low quality

inputs at high prices. “There is no contract or bill or some kind of paper to ensure the sale

to the coyote, they just fill the trucks and the farmer has to believe in the goodwill of the

coyote. If the coyote faces any trouble there is no way to collect the farmer’s bills.”

Knowing this, the challenge was ANSA’s existing credit policy. ANSA had limited

the amount of credit a distributor could access. Increasing the terms, time, or amount of

credit required the distributor to present collateral. However, many distributors could not

afford this additional collateral, so they faced a lack of inventory in the crucial phase of the

harvesting season. The limitations that BOP farmers faced in terms of credit, cash, and

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collateral, made the challenge bigger and obstructed the ability to improve their

productivity, and made it difficult to turn them into ANSA customers.

Clearly, the most important need of the BOP market was a reliable

commercialization channel for the harvests. ANSA needed to incorporate a solution for

this need in its strategy. Hence, ANSA had to make many changes in the organization and

the traditional way of doing business to engage BOP effectively. The CEO suggested that

ANSA could “provide hybrid seeds on loan to farmers and recoup the debt after the

harvest.” This was what the coyotes used to do, but the difference would be that ANSA

was a well-known and reliable player and had better chances to co-finance the inputs with

the support of the MNCs.

Other important insights we confirmed in these site-visit interviews is that farmers

trust their local distributor. They ask distributors for advice and follow their

recommendations. This shows the power of influence that local distributors have over the

farmers’ buying process. In Ayotitlan, a town located only 60 miles from Guadalajara, we

interviewed a very enthusiastic woman, who was the area’s distributor, and her husband,

who was a farmer. The woman and her three daughters managed the store without any

technical or professional background. The region’s farmers owned 3 hectares of property

or less, had no mechanical equipment, and the amount of corn they produced forced them

to rely on the coyotes. It was clear that the area was a BOP market segment.

This time the information she gave did not surprise us. “The farmers in this area

need urgent credit and training,” but she added, “They trust us as distributors, and they

are open to our advice.” As an example she said, “Yesterday an old and very poor farmer

came to the store with a fistful of earth and ask me what kind of bug was attacking his

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crop.” She was a committed leader in her community and showed real concern for the

conditions of the farmers: “I’m trying to improve their well-being, teaching them to buy

insurance every crop season and to sign a Contract Farming Agreement so we can help

them to sell their harvest.” She was already implementing an incipient model of

intermediation in the commercial channel for the crops.

In another round of interviews, we had the chance to visit and have a long talk with

some commercial representatives and some top executives from MNCs. One of these

executives told us a very revealing perspective of the downstream activities in the value

chain; “One of the strengths ANSA has is its people, the sales force, and the technical

support this team provides to the market, especially to the distribution channel. But this

distribution channel is also a disadvantage, because the farmer sees more of the local

distributor than ANSA.” The executive called this an “eclipse effect.” He was warning

ANSA of the risk of positioning excessively the local distributor as the owner of the

market; instead, he suggested that ANSA should take a more dominant presence with the

final consumer.

Following these explorations is the sixth tension situated in the BOP

Network (see Table 6), the struggle of these two opposite forces: Opening ANSA stores

Vs. Developing current distributors. When discarding options and refining the available

ones to convert them into actionable options, the solution began to take form. ANSA

needed to develop a new commercial strategy completely designed for BOP markets. The

decision was not easy. One option was to implement a business model that could be a chain

of retailing stores owned and operated by ANSA. This business model would compete

against the current local distributors, especially against those closer to BOP markets. The

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distributors that had been crucial elements for the current position of ANSA would abandon

the commercial agreement with the company. ANSA would have to develop its own

relationships with final consumers, and would have to gain expertise in small-scattered

markets. Another possible way of implementing this strategy would be to leverage the

strong and faithful relationship with the current distributors and make them part of the

model, linking their stores to the new business model, thereby taking advantage of their

knowledge, insights, and assets. This way, ANSA would not compete against the local

distributors, but would ally with them to compete against others. The President of the board

describes the logic of this idea, “I am not sure about the idea of a branded store, because

farmers look for the owner of the store, they don´t want to do business with employees.”

Another tension emerged located in the Strategizing element of the model

(see Table 6) relating this new idea to ANSA’s current business model. This seventh

tension was, from Within ANSA Vs. Within new business venture. The tension describes

the struggle between the possible ways ANSA could realize the new strategy. One way

could be that ANSA changed the current practice of doing business. The company would

have to change policies about credit, marketing, and distribution and mainly create a new

business process to satisfy the need of commercializing crops. This possibility would

pressure the TMT because the risk of failure would seriously endanger the future of the

company. The TMT like most of the business managers would not risk the current

profitable practices to commit assets and human resources to an unexplored business

model. The other way would be that ANSA would not change current practices, but instead

implement this new idea as a spin off, as an incipient exploration of new markets in an

isolated way. This would imply that a possible failure would not harm the current business

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activities, except for the financial losses that initial investments could represent. The

president emphasized, “If we open new selling points under the name of ANSA we are going

to lose a lot of our distributors and of course market share.” Later he added, “I think it is

better to go step by step, let’s try with one or two stores.”

ANSA TMT defined that they would allocate financial resources from the current

working capital to invest in this new project, and also designate experienced personnel to

form a task force headed by the CBO, who was the more immersed in the BOP project.

Everything would then be contained in a new commercial, legal and taxing identity.

By the end of this phase, the following had become clear:

- TMT was onboard the BOP proposition

- We had to discard the JV with a MNC given the suppliers’ position and related

experiences

- ANSA needed to get involved in the commercialization of the harvest; we did not know

yet how

- The new venture had to be profitable and sustainable with minimum subsidies from

ANSA

- ANSA formed a task force, and they were committed and enthusiastic

- Interviewed local distributors were ready to participate in any innovative project with

ANSA

- The legal format for the new venture seemed to be a franchise model

- The commercial name of the new venture would be AgroEstacion

VI.3 Designing AgroEstacion

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The third phase of the strategizing process, Designing AgroEstacion, focuses on the

origination of the new spin-off in ANSA. The main activities performed by the research

team jointly with the designated task force and TMT were:

Conduct workshops with ANSA executives

Select major option (microfranchising)

Transform task force into AgroEstacion team

Design AgroEstacion business franchise concept and select distributors for partnership

Design AgroEstacion plan, including processes, models, and manuals

Begin initial training process for franchisees

Sign bailment contract (equipment)

Handle legal issues (registration, contracts, and trademarks)

Embedded into the decision of the detailed business model for the new enterprise,

the eighth tension was located in the BOP network element of the model (see Table 6). It

consisted of two competing forces: Franchised distributors Vs. Independent distributors.

When designing the business model of the spin off, we needed to define the nature of the

relationship with the distributors. ANSA TMT wanted to have significant control of the

operations of the new distribution chain given the unexplored and complex business model.

Therefore, on the one hand, a franchise approach would assure this control by designing

tight procedures for each business process. The franchise approach could also assure that

the positioning in the new markets would be ANSA property through developing a brand

that covered an important territory in the country. The CEO said, “Small distributors began

to growth and transformed from being costumers to being competitors. They are very

aggressive and fast.” Even more important, the franchise approach allows selective ly

inviting, evaluating and separating from the business those franchisees that did not meet

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expectations. On the other hand, independent distributors would maintain a lower profile,

protecting the business strategy from predators such as the big MNCs. Those big

companies could easily equal, or even surpass, the investment made by ANSA to attract

those new markets.

Our investigations suggested that the most suitable position for ANSA was

to engage franchised distributors. In order to confirm this and make the smartest decision,

the task force hired a legal firm to advise about the best way to sign distributors. They

recommended adopting a franchise model through a Partnership Business Agreement

(PBA). The leading legal advisor explained: “The model we need to follow is to be a

business platform for agribusiness and commercialization. It is a Partnership Business

Agreement; it is not a regular partnership or an incorporated company. We have been

reviewing options so we do not get all tied up with partners that may in the future want to

leave, and we found that a Partnership Business Agreement is the most adequate for this

project.” The PBA had the following main elements (from the legal advisory firm’s

report):

- “Each signer company (AgroEstacion and the franchisee) maintains its own legal

identity with federal, state, and local authorities. They also have the freedom to

end the agreement after a previously established period of time (one year)

- AgroEstacion will supply, through this agreement, the outsourcing service of

administration (IT, purchasing services, asset administration, and HR

administration) and accounting to the franchisee

- AgroEstacion will supply the complete transformation, aesthetic and operational,

of the local distributor store without cost to the franchisee

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- The agreement will be signed for five years, with renewal possible for five years

more.”

The team needed to clarify an important uncertainty: What do the potential

franchisees think about this approach? To explore this important issue, the CBO and leader

of the implementation process, interviewed in ANSA Headquarters one of the selected

distributors to validate if she would agree to sign the suggested PBA with AgroEstacion.

He presented the preliminary AgroEstacion business plan, and he explained carefully the

nature and conditions of the relationship between AgroEstacion and the franchisees. The

simple and graphic answer to the question, what do you think? Was… where do we sign?

The more detailed design of AgroEstacion included the graphic image, the

architectural design of the stores, the offered products and services, the legal figure and

contracts, the taxation strategy, the outbound logistics, the IT infrastructure, the technical

support, and the interaction with ANSA’s distribution chain.

In addition, an important issue, probably the most critical part of the business

model, needed to be decided: the corn inbound and commercialization strategy. This was

a critical issue due to the novelty in the formal agricultural markets in Mexico, because it

was the competitive advantage for the new business venture, and because it was required

to engage the BOP markets effectively. Further, it was critical because ANSA did not have

any expertise in that process. The president of the board advised: “We should be careful to

not offer something we don’t know about; we should focus on what we are experts in.”

As a result, the ninth tension was located in the strategizing process of the model

(see Table 6). The tension is between Agrochemicals retail Vs. Corn brokerage. As just

explained, the decision about integrating the corn commercializing process into the

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business model was critical for the success or failure of the new venture. On the one hand,

the proven success of ANSA had been in the retail process of agrochemicals. The

hegemony of ANSA in the retail business would afford AgroEstacion success in the new

market exploration. ANSA was a much-respected player, the second biggest in the retailing

business. On the other hand, ANSA was an unknown player in buying and commercializin g

corn to big institutional and industrial buyers.

The MNCs’ executives encouraged ANSA to enter into the corn brokerage activity.

“We had suggested to ANSA in the past to receive grain. When you become the recipient

of the grain, the farmer will trust you and be more open to the advice you give to him.”

They added “ANSA has much more organizational, financial and human resources to

successfully become a corn broker than any coyote, and they are making big money.”

AgroEstacion would be the instrument that ANSA needed to explore that new

industry. The task force carried out research to know in detail the corn market and its

players. They discovered that there is a legal contract that allows AgroEstacion to link the

brokerage activity to the government financial support programs for BOP producers. From

ASERCA (the federal government office that promotes agriculture): “This type of

agreement is basically a partnership or association by contract in which you, the

administrator, search for a buyer for the crop.” As such, AgroEstacion could help the

franchisees, using technology and knowledge to speed up the process and increase the

number of potential buyers.

Another important question that the President of the board constantly raised during

the process of designing the company was, “How are we going to make money in this

business?” There were two possible ways for creating economic value, charging a fee for

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providing business services to the franchisees, services such as administrative and

accounting systems, taxation and legal advice, marketing and branding strategy, among

others. The fee could be a percentage of the monthly revenues of the franchisee. This way

is more similar to the traditional franchise model. The second way of creating value would

come from the profits of the goods and agricultural services distributed by the franchisee.

This second option relied on the potential increase of the volume of the products and

services sold to the franchisees being the exclusive supplier of the franchisee.

This was not a simple business decision between one of these options. The struggle

between these two possible ways of making profits is the tenth tension located in the Value

Co-creation element of the model (see Table 6): The tension between being Exclus ive

supplier to franchisees Vs. being Provider of business services. The task force, now already

transformed into the initial AgroEstacion team, assessed the two possible ways and

suggested centering the business model on the volume of revenues that the BOP markets

can represent given the number of potential customers now attended by the coyotes. The

task force evaluated profits in a consolidated way, adding the revenues and profits that corn

brokerage could bring. The Commercial Manager in the taskforce said, “The real business

in AgroEstacion is selling the corn. Additionally we will learn a new way of selling

agrochemicals, and collect risk-free accounts.”

VI.4 Implementing AgroEstacion

Once designed in detail, the new AgroEstacion was ready to see the light and begin

operations. This fourth phase of strategizing to engage the BOP, Implementing

AgroEstacion, included the following activities:

Design the commercial and cross-learning processes (for ANSA and franchisees)

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Conduct workshops with the research and AgroEstacion teams

Launch first two franchise stores

Initiate the second training process for franchisees

Design the Growth Forum

At this point TMT had decided that AgroEstacion would be a microfranchise

business. Microfranchise is the adaptation of the general franchise concept to engage the

BOP. As explained before, authors in business literature added the “micro” suffix to

indicate that the target market of this business model is the BOP population. It also refers

to a social orientation of the goals in the company, and that the level of investment of the

franchisee is lower than in the traditional franchise.

One of the keys to successful franchising is the appropriate selection of franchisees.

Now that, it is very important to decide very carefully the profile of the franchisees. Equally

important is the selection of the persons to become the first franchisees. The eleventh

tension emerged related to this challenge: Resourceful franchisees Vs. BOP Representative

franchisees. This tension is located in the Value Co-creation element of the integrated

model. On the one hand, the AgroEstacion Team wanted resourceful collaborators in the

distribution chain of the new company. Rather than financial resources, there was a strong

need for knowledge, organizational and physical resources. Knowledge resources would

allow franchisees to understand deeply their BOP customers, the kind of crop they are

producing, the potential of the region for production, and the potential and reliability of

each producer in the region. Organizational resources would allow them to administer a

store, have reliable employees that could help professionally in the stores, and be able to

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learn and manage the basic systems that they would implement. Finally, physical resources

would include important issues such as a strategically located store. On the other hand, to

make AgroEstacioin a truly BOP oriented project it was desirable to select BOP farmers

and distributors with a difficult position to promote their current conditions to a better one.

In simpler words, it was important to select those that needed the franchise to survive.

“This is not a charity institution, we need the best allies, at least at the beginning”

concluded the leader of the AgroEstacion project, who used to be the Credit Manager in

ANSA. He knew very well the profile and capabilities of each possible candidate as

franchisee. “I very much like Florinda (name was changed to protect privacy) to be one of

the first franchisees. She is very active. She has earned the respect of the regional

producers. She is intelligent and learns fast. She is already beginning to receive corn to

collect accounts. She is very willing to innovate. She has two daughters that help in the in

the store, her husband is a BOP farmer… She is one of them,” said the CBO. The criteria

were clear; AgroEstacion needed BOP distributors deeply immersed in that market, but

those distributors needed to be resourceful to help consolidate the AgroEstacion project.

At the end of this research, the AgroEstacion team had selected three distributors

to become AgroEstacion franchisees. Nevertheless, they decided to concentrate initially on

two distributors. The third, a candidate from the Jalisco region, did not yet have access to

the BOP network required and did not participate in or have knowledge of resources related

to grain commercialization, which was an important resource to ensure the franchise’s

consolidation. “There are some distributors that heard about AgroEstacion, and they are

interested in getting into a partnership with us, but… I think that many of them do not

qualify to be an AgroEstacion franchise. Some of these distributors owned resources in

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their network, but they also had additional characteristics that disqualified them to be in a

PBA with ANSA.”

At this stage, a twelfth tension was the struggle between AgroEstacion as an

ANSA’s revenues booster Vs. AgroEstacion as an independent business unit, localized in

the strategizing element of the integrated model (see Table 6). The CBO as the leader of

the project affirmed: “ANSA’s managers supported the project with specific activities, but

no longer play an active-operative role. It is the new task force which invests most of its

time in reconfiguring ANSA’s relationship with the franchisee candidates and in crafting

AgroEstacion.” This tension related to the separation or close relationship of ANSA as a

company and AgroEstacion as a spin-off. On the one hand, ANSA’s TMT wanted to

separate the new venture from ANSA to control any kind of harmful consequences of

changing ANSA’s current business focus. This separation would also allow evaluating real

results of this project and it would develop a real differentiation strategy from the current

one. On the other hand, having a closer relationship would make it easier to obtain the

original purpose of the project, giving ANSA a long-lasting strategy. Considering

AgroEstacion as an additional business line within ANSA would allow ANSA to hold a

stronger position in front of MNCs.

Operating AgroEstacion independently would make the operation of the new

venture more costly, and eventually the lack of corporative support, such as financ ia l,

human, logistic, and organizational resources from ANSA, could make AgroEstacion die

before consolidation. For these reasons, the managerial decision was to adopt an

intermediate solution, to both maintain AgroEstacion as an independent company to be

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able to evaluate and contain any harmful consequence of the BOP orientation, but also to

share resources and strive to make synergies between the two entities.

VI.5 Planning Growth

Once AgroEstacion was operating, the CBO and his team needed to follow up on

controls and measurements, to evaluate the benefits of the spin-off and the convenience of

growing or stopping the project. The financial results for the two initial franchisees were

evident, with increased productivity than before implementing the microfranchise. The

BOP population that engaged with each of the two franchisees was growing. The problem

was that the size of operation of the franchisor was not big enough to consider it financia l ly

successful. In order to be profitable for ANSA, AgroEstacion needed to expand its

operation and enlarge its network. To be profitable, the project needed at least seven

franchisees operating. Growth was urgent.

As researchers, we suggested integrating an executive advisory board as part of the

original project to boost growth. The idea was to invite influential persons from diverse

fields—business, academia, and government—to join the board and contribute new ideas

and viewpoints, but more important, to contribute through their networks. Even if the board

was not yet confirmed and operating, the objective of expanding networks was important.

The first move was to introduce the AgroEstacion business model to suppliers and

governmental officials.

It is important to remember that the aim of the project within ANSA was to develop

a long-term sustainable strategy, and strengthen the company’s position in front of the

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suppliers, all of them MNCs, validating the value contribution of ANSA. In September

2015, the CCO shared important news: one of the MNC suppliers’ top managers called

ANSA to express his company’s interest in signing a partnership contract with ANSA to

open seventeen direct sales stores in different parts of Mexico. The purpose would be to

shorten the commercial chain in specific crops, such as sugar cane, vegetables, and berries.

These crops are by definition not produced by BOP farmers. “They just want to push us to

open these stores, giving $25,000.00 USD per store in cash and $25,000.00 USD in

merchandise, with the unique condition that the stores must be strongly oriented toward

their brand and present advertisement related to their company.” The proposed

partnership would be exclusively an investment through merchandise and capital with

ANSA, the MNC would have no legal ownership of the stores or interest in owning

ANSA’s stocks.

Even though the offer of the MNC to JV with ANSA would validate the

AgroEstacion idea, it was a competing force for the project, revealing the thirteenth tension

identified in the strategizing process (see Table 6): AgroEstación Vs. AgroaliANSA.

AgroaliANSA is the eventual name of the new JV with a MNC that wanted to take

advantage of the expertise that ANSA developed with the implementation of AgroEstacion.

Although the new project is not focusing on BOP markets, and is targeting completely

different customers, regions and crops, the new company will compete for the attention of

the TMT, distracting them away from AgroEstacion to a new project. As the CBO stated,

“AgroaliANSA does not compete with AgroEstacion for customers they are in totally

different segments, but it is distracting economic and human resources from ANSA.”

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During the firm’s Christmas party in 2015, the CCO from this MNC told ANSA’s

CBO and CCO that his company wanted them to travel to Brazil, to their regional office,

to meet with their Brazilian counterparts who are reaching the BOP market in a project that

also does brokerage of crops. Meanwhile, in AgroEstacion the management team is ready

to incorporate the next two franchisees. The growing effort requires attention, and ANSA’s

full financial commitment. By the end of this research, both projects were advancing in

parallel. We will have to wait to know how compatible these projects can be. Whether the

traditional markets will grab the attention and resources from any other project in ANSA,

or whether the BOP strategy will prevail despite the tensions that businesses experience

every day.

VI.6 Synthesis of the Strategizing Process

As a synthesis of the dialectical analysis, I present a table (see Table 6) that

illustrates tensions founded in each element of the Integrated Model for BOP Strategizing.

I assigned each tension an ordinal number as they appeared chronologically in the

strategizing process.

A second dimension in a dialectical analysis is to identify the category of each

tension. Considering that, a tension is a struggle of bipolar opposites for control, an event -

based concept that happens in a given moment of time. These are the tensions I identified

and described in the previous sections. Another important concept for dialectical analysis

is the tension category that refers to the source of the tension and identifies the possible

cause of it. I made a generalization of the causes of the tensions in the BOP strategizing

process in ANSA trying to identify a deeper, perennial cause of the tensions. Further, I

focused on business managers’ maneuvering in the organizations to eventually solve or

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diminish contradictory forces. These maneuvers aim to harmonize the forces in order to

reach the business goals; otherwise, unattended tensions can cause organizational paralysis

and chaos. ANSA managers achieved the harmonization of the tensions in four possible

ways:

1) By trying to solve the tension separating the forces in different spaces or business

entities

2) By separating the contradictory forces in a temporary way, addressing one of the

forces first and the other later

3) Solving the tension by a synthesis, accommodating both forces in a mutual

adapted position

4) By acceptance of the contradiction and its influence in the organizat ion,

maneuvering not to solve it, but to coexist with it.

In Table 6, I show the tensions, the categorization of the tensions, and the

managerial maneuvers observed in AgroEstacion´s strategizing BOP process.

Table 6. Synthesis of the Dialectical Analysis of the Strategizing Process

Strategizing Locus

Tension Tension

Category Managerial Maneuver

Maneuver Category

Firm Network

1. Supplier goals vs. ANSA practices

Performing Tension

Adopting a BOP oriented business strategy to reconcile both antagonist positions, providing MNCs additional revenues coming from new markets and giving ANSA the chance to deepen its competitive advantages, which

Synthesis

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were the knowledge of regional markets and the leadership with small and dispersed markets.

4. One supplier vs. Multiple supplier

Organizing Tension

ANSA continued with the diversification practice in buying and distributing products and technology from different suppliers. ANSA had to develop a very innovative and powerful strategy to, on one hand, satisfy MNCs’ ambition for new markets and revenue growth, and on the other hand keep the bargaining power that ANSA had developed at that time.

Acceptance

BOP Network

5. ANSA quality proposition to farmers vs. current farmer practices

Organizing Tension

ANSA had to make many changes in the organization and in the traditional way of doing business to engage BOP effectively, “provide hybrid seeds on loan to farmers and recoup the debt after the harvest.” Just what the coyotes used to do, but the difference would be that ANSA was a well-known and trustworthy player and had better chances to co-

Synthesis

83

finance the inputs with the support of the MNCs.

6. Opening ANSA stores vs. Developing current distributors

Belonging Tension

ANSA leveraged the strong and faithful relationship with the current distributors and made them part of the model, linking their stores to the new business model. Taking advantage of their knowledge, insights, and assets. This way ANSA would not compete against the local distributors, but would ally with them to compete against others.

Spatial Separation

8. Franchised distributors vs. Independent distributors

Belonging Tension

AgroEstacion adopted a microfranchise model through a Partnership Business Agreement (PBA) given its advantages:

- It assures that the positioning in the new markets would be ANSA property. - Franchise

allows selectively inviting, evaluating and separating from the business those franchisees that did not

Synthesis

84

meet

expectations.

Strategizing

7. From inside ANSA vs. Within new business venture

Organizing Tension

ANSA would treat this new idea as a spin-off, as an incipient exploration of new markets in an isolated way. Thus, a possible failure would not harm the current business activities, perhaps just for the financial losses that initial investments could represent. “… it is better to go step by step, let’s try with one or two stores.”

Spatial Separation

9. Agrochemicals retail vs. Corn brokerage

Orginizing Tension

AgroEstacion will experiment a completely new industry, corn brokerage, the construction of the commercialization channel for crops would allow increasing the number of customers served by the company.

Synthesis

12. AgroEstacion as an ANSA revenues booster vs. AgroEstación as an independent business unit

Organizing Tension

Adopt an intermediate solution, to maintain AgroEstacion as an independent company, to be able to evaluate and contain any harmful consequence of the BOP orientation, but also to share

Synthesis

85

resources to make synergies

13. AgroEstacion vs. AgroaliANSA

Learning Tension

Both new ventures will run parallel, targeting different markets and learning from each other, the managerial maneuvers to balance the struggle for gaining attention and resources are yet to be developed.

Temporal Separation

Value Co-creation

2. Profit generation vs. Social commitment

Performing Tension

ANSA’s TMT accepted to strategize BOP, prioritizing the economic purpose of the company above social commitment, accepting that if they can achieve both, it would be even better.

Acceptance

3. Emergent BOP engagement vs. Deliberate BOP engagement

Organizing Tension

AgroEstacion implies a deliberate BOP engagement, in this stage it seems that TMT could commit to a conscious strategy to target BOP segment, but not necessarily in the entire company, but in a new business line.

Spatial Separation

10. Exclusive supplier to franchisees (volume of the revenues) vs. Provider of business services

Performing Tension

The economic benefit would come from the profits of the goods and agricultural services distributed by the

Synthesis

86

franchisee. This second option relies on the potential increase of the volume of the products and services sold to the franchisees being the exclusive supplier of the franchisee.

11. Resourceful franchisees vs. Representative franchisees

Belonging Tension

AgroEstacion needed BOP distributors deeply immersed in that market, but those distributors needed to be resourceful to help consolidate the project.

Synthesis

VII DISCUSSION

As discussed earlier in the literature review of this dissertation, existing research

on microfranchising focused on the social, commercial, financial, and even politica l

benefits to local communities (Christensen, Parsons, & Fairbourne, 2010) (J. Fairbourne,

2007) (Magleby, 2007). However, I found few studies in the literature that described the

managerial challenges that business organizations deal with when engaging the BOP

through microfranchising. Some studies described tensions that organizations experience

when changing business orientation, but no one offered a detailed empirical account of

how contradictory forces affect the endeavor of implementing a microfranchise model with

the BOP.

This literature review on value co-creation, business ventures engaging the BOP,

and poverty alleviation through profit generation, found few studies that explained

conditions which guided firms to engage the BOP (London & Hart, 2011; Penh, 2009; C.

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K. Prahalad & Ramaswamy, 2004). I found even fewer qualitative process studies that

described the processes through which organizations and managers make decisions when

engaging with lower income population. Further, I found no studies that proposed a

conceptual theory of the major contradictory forces a company faces as it implements

microfranchising to engage the BOP.

Looking to address these gaps, this piece of engaged scholarship research used

dialectics to analyze the strategizing processes to engage BOP in a Mexican agribusiness

to answer this research question: How do organizations maneuver contradictory forces

while using microfranchising to engage the BOP? In doing so, it provides three major

contributions. First, it offers an empirical account of how contradictory forces shaped a

Mexican agribusiness’s efforts to implement microfranchising to engage with BOP

farmers. Second, it presents a conceptual contribution that shows how existing theoretical

concepts can enlighten the analysis of a strategizing process to engage BOP. Third, it

contributes to business practice with managerial lessons that can help better maneuver

contradictory forces and co-create value with BOP segments in agribusiness and other

industries, as well.

VII.1 Empirical Contribution

Companies in all latitudes permanently need to expand their revenues and areas of

influence. Those companies face, on a daily basis, tensions between the stockholders

asking for bigger benefits, and saturated, thus less-profitable, traditional markets.

Companies have therefore begun to explore emerging economies to satisfy growth

pressures. Those economies have a common characteristic, the presence of an unexplored

and growing BOP population (London & Hart, 2004).

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The perennial contradiction of profit enforceability vs. market saturation is a

challenge in which business managers have developed diverse skills, and on which

business education have focused for a long time. In spite of this, the BOP markets present

unexperienced challenges to managers given the totally different tensions faced in this

business engagement with low income populations (Sheth, 2011). This dissertation

provides a detailed empirical account of the strategizing process that ANSA followed to

engage BOP.

As such, this piece of research offers to scholars empirical insights about a

strategizing process that was conducted following theoretical models such as Dynamic

Capability Theory (K. M. Eisenhardt & Martin, 2000; Tashman & Marano, 2009; Teece et

al., 1997), Options Driven Thinking (Bowman & Moskowitz, 2001; Faulkner, 1996; Kogut

& Kulatilaka, 1994), and the Integrated Model for strategizing BOP (Cazares et al., 2015).

These empirical insights illustrate how the theoretical models behave in a practical context.

For the practitioners, this longitudinal case study offers a vivid narrative of the challenges,

tensions, and managerial maneuvers that a TMT faced in its endeavor to design and

implement a sustainable business strategy based on the microfranchise concept (J. S.

Fairbourne, Gibson, & Dyer, 2007). This longitudinal case study provides practical

experiences of a Mexican retail company in the agribusiness industry in different phases

of the strategizing the BOP engagement, and the process of implementing a microfranchise.

These experiences can help business managers to reflect about undertaking or avoiding a

BOP engagement.

The narrative includes relationships with multinational companies that

operate in Mexico. The dissertation describes the tensions multinational companies suffer

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and cause in emerging economies (Cheung & Belden, 2013), illustrating manager ia l

interactions between MNCs and the local partner that owns the insights of the market. In

addition, it offers a detailed description of the maneuvers that Mexican and transnationa l

companies engaged in and the outcome of such decisions and actions.

The case also provides a detailed description of internal processes of a

strong local retail company, the challenges ANSA faced in the selection and recruiting of

microfranchisees, the role of insider distributors, and the details of business environment

in the Mexican agriculture industry. This empirical account is a valuable contribution to

BOP literature given the lack of practical examples of microfranchis ing efforts. All this

narrative constitutes the empirical contribution of this dissertation.

VII.2 Conceptual Contribution

The use of dialectics as the independent theory that helped to form this research,

allowed systematizing the observation of the chronological events in the strategizing

process (Bjerknes et al., 1991). It also facilitated an understanding of the strategizing

processes as triggers of organizational change (Van de Ven & Poole, 1995). As such, this

study contributes to exemplify the use of dialectics as a theoretical lens to analyze business

processes, and to demystify the dialectics frequently associated with Marxism (Wimelius,

2011).

As practically shown in the results section (see Table 6), I based the analysis of the

strategizing process on dialectical concepts. As explained previously, this long process of

designing a strategic plan in ANSA, and later the implementation process of the plan,

implied in the creation and launch of AgroEstacion was sectioned using the Integrated

Model for Strategizing BOP (Cazares et al., 2015). This model allowed making four

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sections of activities not ordered chronologically, but the nature of the strategizing activity

aroused the tensions. The four elements of the model were: 1) Firm Network, 2) BOP

network, 3) Strategizing, and 4) Value Co-creation.

Tension is the first theoretical lens I used in the data reduction process (Miles &

Huberman, 1994). I reduced the vast information retrieved in data collection by identifying

opposite forces struggling for control (Van de Ven & Poole, 1995). According to my

findings, tensions are important obstacles in and drivers of the development and

implementation of a business strategy; they are time and resource consuming and

sometimes the cause of abandoning a business venture; however, when approached

constructively, they can significantly inform and help shape the strategizing process.

The use of the tension categories developed by Smith, Gonin, & Besharov (2013)

allowed not only classifying the tensions and observing possible patterns. Importantly,

these categories refer to the origin of the tension, which allows you to be conscious of the

nature of the tension, the origin of it, and a possible course to address it (Smith, Gonin, &

Besharov, 2013):

- Performing tensions emerge from divergent outcomes, such as goals, metrics, and

stakeholders

- Organizing tensions emerge from divergent internal dynamics, such as structures,

cultures, practices, and processes

- Belonging tensions emerge from divergent identities among subgroups, and

between subgroups and the organization

- Learning tensions of growth, scale, and change emerge from divergent time

horizons

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Acceptance, spatial separation, temporal separation, and synthesis—the categories

of managerial maneuvers proposed by Van de Ven & Pole (1989)—allow, in a similar way,

to use them not just as descriptive tools, but also as strategizing guides. Managers may

design managerial maneuvers based on scientific knowledge avoiding the exclusive use of

heuristics-based management, especially when they have scarce experience in BOP

engaging strategies (Simon, 1979). This dialectical analysis synthetized in Table 6, allowed

presenting the results of this research and proposes the use of the categories of tensions not

only as a descriptive tool, but also as a strategizing one. It is a conceptual contribution of

this research to the use of dialectics in the important arena of business strategy.

VII.3 Managerial Lessons

Consistent with engaged scholarship (insert ref), an important objective in the

research design of this dissertation was to be able to provide lessons for how business

managers can maneuver contradictory forces when co-creating value with the BOP. This

objective responds to the need for relevance in business research. Drawing on the

theoretical literature and the empirical findings from ANSA and the AgroEstacion project,

I suggest a number of managerial lessons related to the strategizing process to engage BOP

through microfranchising:

Lesson 1: Be aware of tensions in a strategizing process. Tensions can precipitate,

slow down, and even collapse a strategizing process.

This lesson suggests that independently of the strategizing method companies

adopt, managers responsible for the strategy should identify and assess the degree of

influence of tensions (Smith et al., 2013). Not being aware of arising tensions could

paralyze the management team causing loss of time and resources in leading with a

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conflictive organizational climate (Van de Ven & Poole, 1995). During the AgroEstacion

strategizing process, we witnessed how tensions in upstream relationships mainta ined

ANSA’s strategy static. Once the TMT was aware of the opposite forces involved in an

uncomfortable relationship with their MNC Suppliers, they were able to analyze the forces,

generate options, and intentionally work in a sustainable strategy to address the conflict.

Lesson 2: Tensions arise entangled. They emerge any place, any time in the

companies involved in strategizing processes. One tension relates to other tensions in the

same space or in different space, in the same time or in different time.

As we could observe in the chronological analys is of tensions in ANSA’s

strategizing process (see Table 5), tensions arose not only during the planning stage. Other

tensions emerged during the implementation process, and old tensions, apparently

addressed, re-appeared in the growing phase. Managers involved in strategizing processes

should be aware that tensions are manifestations of a perennial struggle of opposite forces

(Van de Ven & Poole, 1995), managerial maneuvers can solve or harmonize those tensions,

but because they are caused by a perennial struggle, they can arise again at any unexpected

time.

Lesson 3: Tensions can constructively support strategizing when properly handled.

Managers can address tensions in multiple ways, and the possible resolution of the tensions

relates to the cause of the tension.

As we learned in the strategizing process of ANSA, TMT systematically used

Options Driven Thinking (Faulkner, 1996), as a tool to develop possible solutions for the

most difficult strategic situations (Fichman, Keil, & Tiwana, 2005). We also observed that

ANSA’s TMT designed and implemented multiple managerial maneuvers along the project

93

that I later categorized in the different types of maneuvers: Acceptance, spatial separation,

temporal separation, and synthesis. Even though categories exist and are shown to be very

useful in designing the managerial solution to tensions, it is true that one category of

maneuvering could involve an undefined number of possible solutions and mult ip le

variations of each of them.

Lesson 4: The most frequent tensions in a strategizing process to co-create value

with the BOP are those that arise from divergent internal dynamics, such as cultures,

structures, processes, or practices.

If we observe the dialectical analysis of the strategizing process in ANSA, we see

that six out of thirteen of the observed tensions relate to the resistance to change the

organization’s structure, practices, or culture. It was difficult for ANSA to learn a new

business process, corn brokerage. The decision to accept BOP proposition as a deliberative

strategy was also a source of tension. The change that implied moving from independent

distributors to franchised distributors was also an important source of conflict. As described

by Prahalad & Hart (2002), the lack of knowledge about the BOP markets is the main

source of resistance to engage in these social-oriented business ventures (Sheth, 2011).

Lesson 5: BOP engagement causes many more tensions than traditional business

strategizing processes, but it can also provide profitable and much more sustainable

strategic positions in industries.

It is important to remember that strategizing BOP engagement requires a deep

understanding of BOP needs (C. Prahalad & Hart, 2002), which requires full immersion of

the decision makers of the companies in those markets (Khanna, Palepu, & Sinha, 2005).

If MNCs decide to do business engaged with the BOP, the best way to do that successfully

94

is with a local partner (Sheth, 2011). Sharing benefits and sharing costs are principles of

the successful business engaged with the BOP, and managers evaluating entering into these

ventures need to be aware of that. Business managers have to conceive BOP markets not

as a source of profits, but as profit co-creators, product co-designers, and co-producers

(Vargo & Lusch, 2004). This new way of conceiving business strategy encouraged ANSA

TMT to endeavor this new risk to aspire to achieve a more enduring and sustainab le

position in the agricultural industry.

VIII CONCLUSION

This longitudinal case study centered on a family-owned, medium size retail

company in the agrochemical industry to present an in-depth examination of the

strategizing process to engage BOP through microfranchising. This research has revealed

important insights and helped understand this process in the context of engaging low-

income populations with the aim of socially promoting them while being able to satisfy the

stockholders’ profit expectations, in a word, co-creating value. The perspective of the

research was dialectical analysis, which centered the attention of the evidence in capturing

and describing the different tensions and contradictory forces; different stakeholders were

involved in. The results suggest that ANSA, without the strategizing process described in

the case, could have no longer maintained the outstanding performance it had usually

experienced. Further, our investigation revealed a quite lengthy process that was complex,

full of tensions related to cultural, organizational, commercial and even political aspects of

the business. It also described the diverse actors negotiating, interacting, maneuvering, and

creating alliances.

95

As a piece of engaged scholarship, the findings of this research delivered practical

suggestions for managers involved or interested in strategizing processes with BOP. The

research shows those implications as lessons or suggestions such as being aware of tensions

in a strategizing process and knowing how to best maneuver them. Tensions arise

entangled, they emerge any place, any time in the companies involved in strategizing

processes. One tension relates to other tensions in the same space or in a different space,

in the same time or at different times. Managers can address tensions in multiple ways, and

the possible resolution of the tensions relates to the cause of the tension. The most frequent

tensions in a strategizing process to co-create value with the BOP are those that emerge

from divergent internal dynamics, such as structures, cultures, practices, or processes. BOP

engagement causes much more tensions than traditional business strategizing processes,

but it can also provide profitable and much more sustainable strategic position in industr ies.

As expected, this dissertation has limitations that may become opportunities for

upcoming studies:

1. As I used the case study approach, this report has the advantages of focusing on

multiple stakeholder perspectives and in their context, and dynamics (Mason,

2002). However, involving a single case the findings are not generalizable from the

perspective of the sample to population principle.

2. This study is limited to a private, family-owned organization, in a unique industry

in Mexico. As such, variations in the findings may appear in research involving

public, institutionalized companies, in different industries or in different regions.

3. Interviews and focus groups based on past events could have biased this research

with information filtered out that does not fit or ignores other group’s opinions. For

96

that reason, I attempted to mitigate this bias where possible through triangula t ion

and verification.

4. This report is the result of a longer study that began as a team action research that

we reported at a conference (Cazares et al., 2015). The evidence and collected data

is in a common data file. These early activities helped collect interesting data, but

they also shaped this study, especially through the use of the Integrated Model for

strategizing BOP (Figure 2).

5. While dialectics proved to be a practical and strong framework for looking at these

processes, it is not the only perspective through which complex processes and

organizational change may be analyzed. Certainly, future research may provide

valuable insights on these data using different perspectives or theoretical

frameworks.

97

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APPENDIX

Table 7. General Theoretical Concepts

Area Concept Definition References

BOP concepts

BOP: Base/Bottom of the Pyramid

Lowest section of the world’s pyramid

Occupants are often heterogeneous across multiple dimensions

They typically earn per capita income equivalent to US$3,000 per year or less

Individuals at the BOP constitute the majority of humanity (more than 4 billion people!)

(London & Hart, 2011) (Sen, 1999)

Asset Hexagon A framework to understand the BOP population that addresses “what business should know” about BOP in six quadrants—human, natural, financial, physical, social, and political—and incorporating additional human, social, and political aspects to make a broader definition of poverty (inspired by the Sustainable Livelihoods Approach)

(Penh, 2009)

Social erosion A “vicious cycle”: poverty is environment-linked, including factors such as

access to education, justice, equal opportunities, life expectancy, food security, and so on

(Reardon & Vosti, 1995)

Value co-creation Joint creation of value by the company and consumer

Customers co-construct the product and service

Joint problem definition and problem solving

(C. K. Prahalad & Ramaswamy, 2004)

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Microfranchising concepts

Microfranchise Replicating business systems at the grassroots micro-level with the intent being to alleviate poverty; it mirrors a franchise except on a smaller scale, with the intent being to benefit those at the BOP rather than to merely elevate the wealthy

(J. S. Fairbourne et al., 2007)

Microfranchisee A person or entity (BOP) to whom the right to conduct a business is granted by the microfranchisor.

Microfranchisor The company owning/controlling the rights to grant microfranchises to potential microfranchisees. The licensor or hub company.

Dialectics concepts

Dialectics Theory Dialectics is an analytical tool for explaining relations and understanding change in society.

The theory begins with the Hegelian assumption that the organizational entity exists in a pluralistic world of colliding events, forces, or contradictory values that compete with each other for domination and control. These oppositions might be internal to an organizational entity if it has several conflicting goals or interest groups competing for priority.

(Bjerknes et al., 1991)

(Van de Ven & Poole, 1995)

Tension Struggle of bipolar opposites for control. An

event-based concept that

happens in a given moment of time , it can be observed and eventually solved or harmonized.

(Van de Ven & Poole, 1995)

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Contradiction A contradiction can be viewed as a relation between two opposite aspects of a phenomenon. It refers to a permanent

condition of contradictory

forces that have struggled

historically for a dominant position. This can eventually be solved or diminished by balancing or harmonizing the forces, by a complete domination of one by the other, or by a mutual adaptation.

(Van de Ven & Poole, 1995)

Change The outcome of tensions between opposing forces based on their relative strength. If the non-dominate force gains strength, the relative balance will be affected, causing change in some direction.

Tensions Categories

Performing Tensions: Tensions that emerge from divergent outcomes, such as goals, metrics, and stakeholders.

(Smith & Lewis, 2011)

Organizing Tensions: Tensions that emerge from divergent internal dynamics, such as structures, cultures, practices, and processes.

Belonging Tensions: Tensions that emerge from divergent identities among subgroups, and between subgroups and the organization.

Learning Tensions: Tensions of growth, scale, and change that emerge from divergent time horizons.

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Maneuver Categories

1. Acceptance, keeping tensions separate and appreciating their differences

(Poole & Van de Ven, 1989)

2. Spatial Separation, allocating opposing forces across different organizational units

3. Temporal Separation, choosing one pole of a tension at one point in time and then switching

4. Synthesis, seeking a view that accommodates the opposing poles.